MERCURY SYSTEMS INC
For the period ended Mar 27, 2026. Filed May 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 27, 2026 · Filed May 5, 2026
MRCY$73.55+12.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-12-26; filed 2026-02-03.
0001049521-26-000006
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-27; filed 2026-05-05.
0001049521-26-000024
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 129 previous paragraphs and 130 current paragraphs.
81 unchanged; 44 reworded; 5 added; 4 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Selling, general and administrative expenses decreased $3.9 million, or 9.1%, to $39.1 million during the third quarter ended March 27, 2026, as compared to $43.0 million in the third quarter ended March 28, 2025. The decrease was primarily driven by lower litigation and settlement, depreciation, and consulting expense of $2.6 million, $1.9 million, and $0.8 million, respectively. These decreases were partially offset by higher compensation expense and software licensing fees of $1.6 million and $1.0 million, respectively.
Current report
OTHER(EXPENSE) INCOME, NET
Current report
Selling, general and administrative expenses increased $10.5 million, or 9.0%, to $127.2 million during the nine months ended March 27, 2026, as compared to $116.7 million during the nine months ended March 28, 2025. The increase was primarily driven by higher compensation, litigation and settlement, and software licensing fees expense of $8.4 million, $4.5 million, and $2.5 million, respectively. These increases were partially offset by lower depreciation and consulting expense of $3.1 million and $2.2 million, respectively.
Current report
Acquisition costs and other related expenses were $0.9 million during the nine months ended March 27, 2026, as compared to $0.7 million during the nine months ended March 28, 2025. The acquisition costs and other related expenses we incurred during the nine months ended March 27, 2026 primarily relate to $0.4 million related to run-rate amortization of fair value adjustments from purchase accounting as well as an immaterial amount of costs incurred in the asset acquisition of a provider of specialized manufacturing processes. The acquisition costs and other related expenses we incurred during the nine months ended March 28, 2025 includes $0.5 million related to run-rate amortization of fair value adjustments from purchase accounting and $0.2 million related to the acquisition of Star Lab and disposal of our manufacturing operations in Plan-Les-Ouates, Switzerland.
Current report
On April 30, 2026, we repaid $150.0 million of the Revolver, leaving $441.5 million drawn on the Revolver as of that date. Because this partial repayment occurred after the end of the fiscal quarter, it is not reflected in the accompanying balance sheet as of the end of the third quarter. The repayment was funded with available cash on hand and does not affect our assessment of liquidity or capital resources as of March 27, 2026. We remained in compliance with all applicable financial covenants both before and after the partial repayment. We continue to evaluate opportunities to further reduce outstanding borrowings under the facility depending on market conditions, operational requirements and cash flows.
Removed paragraphs (4)
Previous report
Selling, general and administrative expenses increased $1.6 million, or 4.0%, to $42.1 million during the second quarter ended December 26, 2025, as compared to $40.5 million in the second quarter ended December 27, 2024. The increase was primarily driven by higher litigation and settlement expense and software licensing fees of $1.2 million and $1.1 million, respectively. These increases were partially offset by lower consulting expense of $0.8 million. 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, as compared to $1.4 million during the second quarter ended December 27, 2024. Litigation and settlement expense also included $1.0 million related to contract matters as compared to $0.2 million during the second quarter ended December 27, 2024.
Previous report
OTHERE XPENSE, NET
Previous report
Selling, general and administrative expenses increased $14.4 million, or 19.5%, to $88.0 million during the six months ended December 26, 2025, as compared to $73.7 million during the six months ended December 27, 2024. The increase was primarily driven by higher litigation and settlement expense, compensation costs, and software licensing fees of $7.2 million, $7.0 million, and $1.5 million, respectively. These increases were partially offset by lower consulting and depreciation expense of $1.3 million and $1.2 million, respectively. The litigation and settlement expense incurred during the six months ended December 26, 2025 was primarily comprised of $7.1 million related to the dispute with our former CEO, which was settled during the current quarter, as compared to $1.4 million during the six months ended December 27, 2024. Litigation and settlement expense also included $2.0 million related to contract matters as compared to $0.2 million during the six months ended December 27, 2024.
Previous report
Acquisition costs and other related expenses were $0.7 million during the six months ended December 26, 2025, as compared to $0.4 million during the six months ended December 27, 2024. Acquisition costs and other related expenses during the six months ended December 27, 2024 includes $0.4 million related to run-rate amortization of fair value adjustments from purchase accounting.
Reworded paragraphs (44)
Previous wording
From time to time, information provided, statements made by our employees or information included in our filings with the Securities and Exchange Commission (“SEC”) may contain statements that are not historical facts but that are “forward-looking statements,” which involve risks and uncertainties. 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 our markets, effects of any U.S. federal government shutdown or extended continuing resolution, effects of increasingly volatile geopolitical events 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, including tariffs, changes in, or in the interpretation or enforcement of, environmental rules and regulations, market acceptance of our 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, failure to meet contractual performance specifications, adherence to required manufacturing standards, capacity underutilization, increases in scrap or inventory write-offs, failure to achieve or maintain manufacturing quality certifications, such as AS9100, failure to achieve or maintain qualified business systems, such as those required by the DFARS, adverse findings in government audits or investigations, 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 arrangem…
Excerpt shortened here; the source contains the full paragraph.
Current wording
From time to time, information provided, statements made by our employees or information included in our filings with the Securities and Exchange Commission (“SEC”) may contain statements that are not historical facts but that are “forward-looking statements,” which involve risks and uncertainties. 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 our markets, effects of any U.S. federal government shutdown or extended continuing resolution, effects of increasingly volatile geopolitical events 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, including tariffs, changes in, or in the interpretation or enforcement of, environmental rules and regulations, market acceptance of our 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, failure to meet contractual performance specifications, adherence to required manufacturing standards, capacity underutilization, increases in scrap or inventory write-offs, failure to achieve or maintain manufacturing quality certifications, such as AS9100, failure to achieve or maintain qualified business systems, such as those required by the DFARS, adverse findings in government audits or investigations, 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, including the risks from heightened, persistent, and increasingly sophisticated nation-state level cyberatt…
Excerpt shortened here; the source contains the full paragraph.
Previous wording
As of December 26, 2025, we had 2,135 employees. We employ hardware and software architects and design engineers, primarily engaged in engineering and research and product development activities to achieve our objectives to fully capitalize upon and maintain our technological leads in the high-performance, real-time sensor processing industry and in mission computing, platform management and other safety-critical applications. Our talent attraction, engagement and retention is critical to execute on our long-term strategy. We invest in our culture and values to drive employee engagement that turns ideas into action, delivering trusted and secure solutions at the speed of innovation. We believe that our success depends on our ability to foster a company-wide culture that values a broad range of solutions to problems, a wide array of skills and experiences, and multiple perspectives. We are committed to providing an inclusive environment that respects the varied backgrounds and viewpoints of our employees. We believe that the workforce required to grow our business and deliver creative solutions must be rich in diverse thought and experience. Our initiatives focus on building and maintaining the talent that will create cohesive and collaborative teams that drive innovation. By adhering to these values, it will help our employees to realize their full potential at work to provide Innovation That Matters®.
Current wording
As of March 27, 2026, we had 2,117 employees. We employ hardware and software architects and design engineers, primarily engaged in engineering and research and product development activities to achieve our objectives to fully capitalize upon and maintain our technological leads in the high-performance, real-time sensor processing industry and in mission computing, platform management and other safety-critical applications. Our talent attraction, engagement and retention is critical to execute on our long-term strategy. We invest in our culture and values to drive employee engagement that turns ideas into action, delivering trusted and secure solutions at the speed of innovation. We believe that our success depends on our ability to foster a company-wide culture that values a broad range of solutions to problems, a wide array of skills and experiences, and multiple perspectives. We are committed to providing an inclusive environment that respects the varied backgrounds and viewpoints of our employees. We believe that the workforce required to grow our business and deliver creative solutions must be rich in diverse thought and experience. Our initiatives focus on building and maintaining the talent that will create cohesive and collaborative teams that drive innovation. By adhering to these values, it will help our employees to realize their full potential at work to provide Innovation That Matters®.
Previous wording
Our consolidated revenues, net loss, diluted net loss per share, adjusted earnings per share (“adjusted EPS”), and adjusted EBITDA for the second quarter ended December 26, 2025 were $232.9 million, $15.1 million, $0.26, $0.16, and $30.0 million, respectively. Our consolidated revenues, net loss, diluted net loss per share, adjusted earnings per share (“adjusted EPS”), and adjusted EBITDA for the six months ended December 26, 2025 were $458.1 million, $27.6 million, $0.47, $0.41, and $65.6 million, respectively. See the Non-GAAP Financial Measures section for a reconciliation to our most directly comparable GAAP financial measures.
Current wording
Our consolidated revenues, net loss, diluted net loss per share, adjusted earnings per share (“adjusted EPS”), and adjusted EBITDA for the third quarter ended March 27, 2026 were $235.8 million, $2.9 million, $0.04, $0.27, and $36.1 million, respectively. Our consolidated revenues, net loss, diluted net loss per share, adjusted earnings per share (“adjusted EPS”), and adjusted EBITDA for the nine months ended March 27, 2026 were $693.8 million, $30.5 million, $0.51, $0.68, and $101.7 million, respectively. See the Non-GAAP Financial Measures section for a reconciliation to our most directly comparable GAAP financial measures.
Previous wording
There were 13 weeks included in the results of operations for the second quarters ended December 26, 2025 and December 27, 2024, respectively. There were 26 weeks during thesix months ended December 26, 2025 and December 27, 2024, respectively. The results for the second quarter and six months ended December 26, 2025 are not necessarily indicative of the results to be expected for the full fiscal year.
Current wording
There were 13 weeks included in the results of operations for the third quarters ended March 27, 2026 and March 28, 2025, respectively. There were 39 weeks during thenine months ended March 27, 2026 and March 28, 2025, respectively. The results for the third quarter and nine months ended March 27, 2026 are not necessarily indicative of the results to be expected for the full fiscal year.
Previous wording
The second quarter ended December 26, 2025 compared to the second quarter ended December 27, 2024
Current wording
The third quarter ended March 27, 2026 compared to the third quarter ended March 28, 2025
Previous wording
The following table sets forth, for the second quarter ended indicated, financial data from the Consolidated Statements of Operations and Comprehensive Loss:
Current wording
The following table sets forth, for the third quarter ended indicated, financial data from the Consolidated Statements of Operations and Comprehensive Income (Loss):
Previous wording
Total revenues increased $9.7 million, or 4.4%, to $232.9 million during the second quarter ended December 26, 2025, as compared to $223.1 million during the second quarter ended December 27, 2024. Revenues increased year over year as we continued to execute on our program base, and continued toward full rate production of our common processing architecture programs. Point in time revenue and over time revenue represented 55% and 45%, respectively, of total revenues during the second quarter ended December 26, 2025, an increase of $6.6 million and $3.3 million, respectively. Point in time revenue and over time revenue represented 55% and 45% respectively, of total revenues during the second quarter ended December 27, 2024.
Current wording
Total revenues increased $24.4 million, or 11.5%, to $235.8 million during the third quarter ended March 27, 2026, as compared to $211.4 million during the third quarter ended March 28, 2025. Revenues increased year over year as we continued to execute on our program base. Point in time revenue and over time revenue represented 52% and 48%, respectively, of total revenues during the third quarter ended March 27, 2026, an increase of $9.8 million and $14.6 million, respectively. Point in time revenue and over time revenue represented 53% and 47% respectively, of total revenues during the third quarter ended March 28, 2025.
Previous wording
Revenue increases were driven by the modules and sub-assemblies as well as the components product grouping which increased $14.4 million and $3.6 million, respectively, partially offset by the integrated solutions product grouping which decreased $8.3 million during the second quarter ended December 26, 2025, when compared to the prior period. The increase in total revenue was primarily driven by the radar, electronic warfare, C4I, and other sensor and effector end applications with increases of $6.5 million, $3.6 million, $2.5 million, and $1.8 million respectively, partially offset by other end applications which decreased $4.7 million. The increase in total revenue was also driven by the Land, Other, and Naval platforms with increases of $14.3 million, $5.7 million, and $1.7 million, respectively, partially offset by a decrease to the Airborne platform of $12.0 million. The largest program increases were related to two secure processing programs and SEWIP, partially offset by decreases in Aegis and an electronic warfare program when compared to the prior period. There were no programs comprising 10% or more of our revenues for the second quarters ended December 26, 2025 or December 27, 2024.
Current wording
Revenue increases were driven by the modules and sub-assemblies as well as the integrated solutions product grouping which increased $17.5 million and $11.0 million, respectively, partially offset by the components product grouping which decreased $4.1 million during the third quarter ended March 27, 2026, when compared to the prior period. The increase in total revenue was primarily driven by the other sensor and effector, radar, and electronic warfare end applications with increases of $17.3 million, $8.9 million, and $8.6 million, respectively, partially offset by C4I and other end applications which decreased $7.0 million and $3.4 million, respectively. The increase in total revenue was also driven by the Land, Space, and Naval platforms with increases of $19.0 million, $13.9 million, and $12.0 million, respectively, partially offset by decreases to the Airborne and Other platforms of $17.7 million and $2.8 million, respectively. The largest program increases were related to LTAMDS, PWSA, and SEWIP, partially offset by a decrease in F/A-18 when compared to the prior period. There were no programs comprising 10% or more of our revenues for the third quarters ended March 27, 2026 or March 28, 2025.
Previous wording
Gross margin was 26.0% for the second quarter ended December 26, 2025, a decrease of 130 basis points from the 27.3% gross margin realized during the second quarter ended December 27, 2024. 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, partially offset by lower manufacturing variances of $5.3 million and net estimate at completion ("EAC") change impact on our programs recognized over time of approximately $3.5 million recorded in the quarter, an incremental improvement of approximately $0.9 million, or 50 basis points, when compared to the prior period. 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.
Current wording
Gross margin was 29.3% for the third quarter ended March 27, 2026, an increase of 230 basis points from the 27.0% gross margin realized during the third quarter ended March 28, 2025. The higher gross margin was driven by net estimate at completion ("EAC") change impact on our programs recognized over time of approximately $2.1 million recorded in the quarter, an incremental improvement of approximately $1.6 million, or 80 basis points, when compared to the prior period. The increase was also driven by lower net manufacturing variances $4.1 million, partially offset by higher inventory reserves of $3.3 million.
Previous wording
Research and development expenses decreased $6.0 million, or 28.0%, to $15.4 million during the second quarter ended December 26, 2025, as compared to $21.4 million during the second quarter ended December 27, 2024. The decrease was primarily driven by efficiency improvements and the savings from headcount reductions of approximately 225 employees, initiated in fiscal 2025, resulting in lower expense of $4.1 million. We also saw decreased expense on supply, depreciation, and software licensing fees of $1.0 million, $0.6 million, and $0.4 million, respectively.
Current wording
Research and development expenses decreased $1.0 million, or 6.1%, to $15.0 million during the third quarter ended March 27, 2026, as compared to $16.0 million during the third quarter ended March 28, 2025. The decrease was primarily driven by efficiency improvements and the savings from headcount reductions of approximately 120 employees, initiated across fiscal 2025 and 2026, resulting in lower expense of $5.9 million. There was also decreased depreciation expense of $0.4 million and outside service expense of $0.4 million. These decreases were partially offset by higher engineering utilization of $4.4 million and supplies expense of $1.3 million.
Previous wording
We recognized $9.7 million of amortization of intangible assets during the second quarter ended December 26, 2025, as compared to $11.2 million during the second quarter ended December 27, 2024, primarily due to various customer relationship intangibles being fully amortized in fiscal 2025.
Current wording
We recognized $9.6 million of amortization of intangible assets during the third quarter ended March 27, 2026, as compared to $10.2 million during the third quarter ended March 28, 2025, primarily due to various customer relationship intangibles being fully amortized in fiscal 2025.
Previous wording
We incurred $4.1 million of restructuring and other charges during the second quarter ended December 26, 2025, as compared to an immaterial amount during the second quarter ended December 27, 2024. Restructuring and other charges during the second quarter ended December 26, 2025 were primarily severance related charges associated with workforce reductions initiated during the quarter that eliminated approximately 60 positions. There was an immaterial amount of restructuring and other charges during thesecond quarters ended December 27, 2024.
Current wording
We incurred an immaterial amount of restructuring and other charges during the third quarter ended March 27, 2026, as compared to $4.9 million during the third quarter ended March 28, 2025. Restructuring and other charges during the third quarter ended March 28, 2025 included $4.9 million for separation costs related to the reduction in workforce initiated January 29, 2025 impacting approximately 145 positions.
Previous wording
There was an immaterial amount of acquisition costs and other related expenses during the second quarters ended December 26, 2025 and December 27, 2024.
Current wording
There was an immaterial amount of acquisition costs and other related expenses, including costs incurred in the asset acquisition of a provider of specialized manufacturing processes, during the third quarters ended March 27, 2026 and March 28, 2025.
Previous wording
We recognized $1.6 million of interest income during the second quarter ended December 26, 2025, as compared to $0.4 million during the second quarter ended December 27, 2024. The increase was driven by higher average cash and cash equivalents during the period.
Current wording
We recognized $2.5 million of interest income during the third quarter ended March 27, 2026, as compared to $1.3 million during the third quarter ended March 28, 2025. The increase was driven by higher average cash and cash equivalents during the period.
Previous wording
We incurred $7.8 million of interest expense during the second quarter ended December 26, 2025, as compared to $8.4 million during the second quarter ended December 27, 2024. The decrease was driven by lower interest rates during the period on our existing credit facility (the "Revolver").
Current wording
We incurred $7.3 million of interest expense during the third quarter ended March 27, 2026, as compared to $8.1 million during the third quarter ended March 28, 2025. The decrease was driven by lower interest rates during the period on our existing credit facility (the "Revolver").
Previous wording
Other expense, net was $0.4 million during the second quarter ended December 26, 2025, as compared to $3.9 million during the second quarter ended December 27, 2024. The second quarter ended December 26, 2025 includes $1.5 million of financing costs, partially offset by $0.2 million net foreign currency translation gains. The second quarter ended December 27, 2024 includes $2.4 million net foreign currency translation losses, $1.1 million of financing costs, $0.1 million of consulting costs, and $0.1 million of securities class action expense.
Current wording
Other expense, net was $3.1 million during the third quarter ended March 27, 2026, as compared to other income, net of $2.3 million during the third quarter ended March 28, 2025. The third quarter ended March 27, 2026 includes a $1.9 million adjustment related to the disposal of our former manufacturing operations in Switzerland, $0.6 million of financing costs, and $0.5 million of net foreign currency translation losses. The third quarter ended March 28, 2025 includes other income of $2.7 million, related to the sale of the mc.com domain name, $1.2 million net of foreign currency translation gains, $0.9 million of financing costs, $0.5 million of securities class action expense, and $0.2 million of consulting costs.
Previous wording
We recorded an income tax benefit of $2.4 million and $6.7 million on a loss before income taxes of $17.5 million and $24.3 million for the second quarters ended December 26, 2025 and December 27, 2024, respectively.
Current wording
We recorded an income tax provision of $0.2 million and an income tax benefit of $2.6 million on a loss before income taxes of $2.7 million and $21.8 million for the third quarters ended March 27, 2026 and March 28, 2025, respectively.
Previous wording
During the second quarter ended December 26, 2025 and December 27, 2024, we recognized a tax benefit of $1.0 million related to stock compensation windfalls and a tax provision of $0.1 million related to stock compensation shortfalls, respectively.
Current wording
During thethird quarters ended March 27, 2026 and March 28, 2025, we recognized a tax benefit of $0.3 million related to stock compensation windfalls and a tax provision of less than $0.1 million related to stock compensation shortfalls, respectively.
Previous wording
The effective tax rate for the second quarter ended December 26, 2025 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, stock compensation windfalls, and state taxes. The effective tax rate for the second quarter ended December 27, 2024 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, and state taxes.
Current wording
The effective tax rate for the third quarter ended March 27, 2026 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, stock compensation windfalls, and state taxes. The effective tax rate for the third quarter ended March 28, 2025 differed from the federal statutory rate primarily due to federal and state research and development credits, return to provision adjustments, non-deductible compensation, and state taxes.
Previous wording
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes a broad range of tax provisions and extended and modified certain provisions of the Tax Cuts and Jobs Act ("TCJA"), including, but not limited to, restoration of 100% bonus depreciation, EBITDA-based interest expense limitation and immediate expensing of domestic research and development expenditures. We have evaluated the potential impact of this legislation and expect it to result primarily in a timing difference, with no material impact on our effective tax rate.
Current wording
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted, which includes a broad range of tax provisions and extended and modified certain provisions of the Tax Cuts and Jobs Act ("TCJA"), including, but not limited to, restoration of 100% bonus depreciation, EBITDA-based interest provision limitation and immediate expensing of domestic research and development expenditures. We have evaluated the potential impact of this legislation and expect it to result primarily in a timing difference, with no material impact on our effective tax rate.
Previous wording
Six months ended December 26, 2025 compared to the six months ended December 27, 2024
Current wording
Nine months ended March 27, 2026 compared to the nine months ended March 28, 2025
Previous wording
The following table sets forth, for thesix month periods indicated, financial data from the Consolidated Statements of Operations and Comprehensive Loss:
Current wording
The following table sets forth, for the nine month periods indicated, financial data from the Consolidated Statements of Operations and Comprehensive Income (Loss):
Previous wording
Total revenues increased $30.5 million, or 7.1%, to $458.1 million during the six months ended December 26, 2025, as compared to $427.6 million during the six months ended December 27, 2024. Revenues increased year over year as we continued to execute on our program base, and continued toward full rate production of our common processing architecture programs. Point in time revenue and over time revenue represented 54% and 46%, respectively, of total revenues during the six months ended December 26, 2025, an increase of $31.7 million and decrease of $1.2 million, respectively. Point in time revenue and over time revenue each represented 50% of total revenue during the six months ended December 27, 2024.
Current wording
Total revenues increased $54.9 million, or 8.6%, to $693.8 million during the nine months ended March 27, 2026, as compared to $638.9 million during the nine months ended March 28, 2025. Revenues increased year over year as we continued to execute on our program base. Point in time revenue and over time revenue represented 53% and 47%, respectively, of total revenues during the nine months ended March 27, 2026, an increase of $41.5 million and $13.4 million, respectively. Point in time revenue and over time revenue represented 51% and 49%, respectively, of total revenue during the nine months ended March 28, 2025.
Previous wording
Revenue increases by were driven by the modules and sub-assemblies, as well as the components product grouping which increased $34.7 million and $4.3 million, respectively, partially offset by the integrated solutions product grouping which decreased $8.5 million, when compared to the prior period. The increase in total revenue was primarily driven by the C4I, other sensor and effector, and radar end applications with increases of $28.6 million, $5.2 million, and $3.1 million, respectively, partially offset by decreases to other end applications and electronic warfare of $4.6 million and $1.8 million, respectively. The increase in total revenue was also driven by the Land, Other, Space, and Naval platforms with increases of $22.8 million, $11.6 million, $3.2 million, and $0.7 million, respectively, partially offset by a decrease to the Airborne platform of $7.8 million. The largest program increases were related to two secure processing programs, KC-46, F/A-18, and an electronic warfare program, partially offset by Aegis. There were no programs comprising 10% or more of our revenues for the six months ended December 26, 2025 or December 27, 2024.
Current wording
Revenue increases by were driven by the modules and sub-assemblies and integrated solutions product groupings which increased $52.2 million and $2.5 million, respectively, when compared to the prior period. The increase in total revenue was primarily driven by the other sensor and effector, C4I, radar, and electronic warfare end applications with increases of $22.4 million, $21.7 million, $12.0 million, and $6.8 million, respectively, partially offset by a decrease to other end applications of $8.0 million. The increase in total revenue was also driven by the Land, Space, Naval, and Other platforms with increases of $41.9 million, $17.1 million, $12.7 million, and $8.8 million, respectively, partially offset by a decrease to the Airborne platform of $25.6 million. The largest program increases were related to a secure processing program, an integrated space program, SEWIP, PWSA, and KC-46, partially offset by T-45 and a secure processing program. There were no programs comprising 10% or more of our revenues for the nine months ended March 27, 2026 or March 28, 2025.
Previous wording
Gross margin was 27.0% for the six months ended December 26, 2025, an increase of 70 basis points from the 26.3% gross margin realized during the six months ended December 27, 2024. The higher gross margin was driven primarily by lower manufacturing variances of $12.7 million and net estimate at completion ("EAC") change impact on our programs recognized over time of $7.5 million recorded in the period, an incremental improvement of approximately $5.2 million, or 100 basis points, when compared to the prior period, partially offset by higher scrap and inventory reserves of $3.5 million and $1.5 million, respectively. 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 fiscal 2026, but they could impact our gross margins in the future.
Current wording
Gross margin was 27.8% for the nine months ended March 27, 2026, an increase of 120 basis points from the 26.6% gross margin realized during the nine months ended March 28, 2025. The higher gross margin was driven primarily by net EAC change impact on our programs recognized over time of $9.6 million recorded in the period, an incremental improvement of approximately $6.7 million, or 120 basis points, when compared to the prior period. The increase was also driven by lower manufacturing variances of $12.8 million, partially offset by higher inventory reserves of $4.8 million and scrap of $3.4 million.
Previous wording
Research and development expenses decreased $11.2 million, or 28.1%, to $28.6 million during the six months ended December 26, 2025, as compared to $39.8 million during the six months ended December 27, 2024. The decrease was primarily driven by efficiency improvements and the savings from headcount reductions of 225 employees, initiated in fiscal 2025, resulting in lower expense of $9.5 million, as well as decreased expense on depreciation, software license fees, and outside services of $1.1 million, $0.8 million, and $0.6 million, respectively. These decreases were partially offset by higher supply expense of $1.2 million.
Current wording
Research and development expenses decreased $12.1 million, or 21.8%, to $43.6 million during the nine months ended March 27, 2026, as compared to $55.7 million during the nine months ended March 28, 2025. The decrease was primarily driven by efficiency improvements and the savings from headcount reductions of approximately 120 employees, initiated across fiscal 2025 and 2026, resulting in lower expense of $16.0 million. There was also decreased expense on depreciation, software licensing fees, outside services, and consulting of $1.6 million, $1.2 million, $1.0 million, $0.4 million, respectively. These decreases were partially offset by higher engineering utilization of $5.8 million and supplies expense of $2.5 million.
Previous wording
We recognized $9.7 million of amortization of intangible assets during the six months ended December 26, 2025, as compared to $11.2 million during the six months ended December 27, 2024, primarily due to various customer relationship intangibles being fully amortized in fiscal 2025.
Current wording
We recognized $29.5 million of amortization of intangible assets during the nine months ended March 27, 2026, as compared to $32.6 million during the nine months ended March 28, 2025, primarily due to various customer relationship intangibles being fully amortized in fiscal 2025.
Previous wording
Restructuring and other charges were $5.6 million during the six months ended December 26, 2025, as compared to $2.3 million during the six months ended December 27, 2024. Restructuring and other charges during the six months ended December 26, 2025 were primarily severance related charges associated with workforce reductions initiated during the six months ended that eliminated approximately 100 positions. Restructuring and other charges during the six months ended December 27, 2024 are primarily related to severance related charges.
Current wording
Restructuring and other charges were $5.6 million during the nine months ended March 27, 2026, as compared to $7.2 million during the nine months ended March 28, 2025. Restructuring and other charges during the nine months ended March 27, 2026 were primarily severance related charges associated with workforce reductions initiated during the period that eliminated approximately 100 positions. Restructuring and other charges during the nine months ended March 28, 2025 related to severance related charges primarily related to the reduction in workforce initiated January 29, 2025.
Previous wording
We recognized $3.7 million of interest income during the six months ended December 26, 2025, as compared to $1.0 million during the six months ended December 27, 2024. The increase was driven by higher average cash and cash equivalents during the period.
Current wording
We recognized $6.2 million of interest income during the nine months ended March 27, 2026, as compared to $2.2 million during the nine months ended March 28, 2025. The increase was driven by higher average cash and cash equivalents during the period.
Previous wording
We incurred $15.7 million of interest expense during the six months ended December 26, 2025, as compared to $17.3 million during the six months ended December 27, 2024. The decrease was driven by lower interest rates during the period on the Revolver.
Current wording
We incurred $23.1 million of interest expense during the nine months ended March 27, 2026, as compared to $25.4 million during the nine months ended March 28, 2025. The decrease was driven by lower interest rates during the period on the Revolver.
Previous wording
Other expense, net decreased $2.7 million to $2.5 million during the six months ended December 26, 2025, as compared to $5.2 million during the six months ended December 27, 2024. There was $2.3 million of financing costs and $0.6 million of net foreign currency translation losses during the six months ended December 26, 2025. During the six months ended December 27, 2024, there were $3.4 million of financing costs, $0.9 million of net foreign currency translation losses, $0.7 million of consulting costs, and $0.3 million of securities class action expense, partially offset by other income of $0.2 million.
Current wording
Other expense, net increased $2.7 million to $5.6 million during the nine months ended March 27, 2026, as compared to $2.9 million during the nine months ended March 28, 2025. There was $2.9 million of financing costs, a $1.9 million adjustment related to the disposal of our former manufacturing operations in Switzerland, and $1.1 million of net foreign currency translation losses during the nine months ended March 27, 2026. During the nine months ended March 28, 2025, there was $4.3 million of financing costs, $0.9 million of consulting costs, and $0.8 million of securities class action expense, partially offset by other income of $2.9 million, primarily related to the sale of the mc.com domain name, and $0.3 million of net foreign currency translation gains.
Previous wording
We recorded an income tax benefit of $6.4 million and $12.3 million on a loss before income taxes of $34.0 million and $47.4 million for the six months ended December 26, 2025 and December 27, 2024, respectively.
Current wording
We recorded an income tax benefit of $6.2 million and $15.0 million on a loss before income taxes of $36.7 million and $69.2 million for the nine months ended March 27, 2026 and March 28, 2025, respectively.
Previous wording
During the six months ended December 26, 2025 and December 27, 2024, we recognized a tax benefit of $2.1 million related to stock compensation windfalls and a tax provision of $0.4 million related to stock compensation shortfalls, respectively.
Current wording
During the nine months ended March 27, 2026 and March 28, 2025, we recognized a tax benefit of $2.4 million related to stock compensation windfalls and a tax provision of $0.4 million related to stock compensation shortfalls, respectively.
Previous wording
The effective tax rate for the six months ended December 26, 2025 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, stock compensation windfalls, and state taxes. The effective tax rate for the six months ended December 27, 2024 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, and state taxes.
Current wording
The effective tax rate for the nine months ended March 27, 2026 differed from the federal statutory rate primarily due to federal and state research and development credits, non-deductible compensation, stock compensation windfalls, and state taxes. The effective tax rate for the nine months ended March 28, 2025 differed from the federal statutory rate primarily due to federal and state research and development credits, return to provision adjustments, non-deductible compensation, and state taxes.
Previous wording
On July 4, 2025, the OBBBA was enacted, which includes a broad range of tax provisions and extended and modified certain provisions of the TCJA, including, but not limited to, restoration of 100% bonus depreciation, EBITDA-based interest expense limitation and immediate expensing of domestic research and development expenditures. We have evaluated the potential impact of this legislation and expect it to result primarily in a timing difference, with no material impact on our effective tax rate.
Current wording
On July 4, 2025, the OBBBA was enacted, which includes a broad range of tax provisions and extended and modified certain provisions of the TCJA, including, but not limited to, restoration of 100% bonus depreciation, EBITDA-based interest provision limitation and immediate expensing of domestic research and development expenditures. We have evaluated the potential impact of this legislation and expect it to result primarily in a timing difference, with no material impact on our effective tax rate.
Previous wording
Our primary sources of liquidity come from existing cash and cash generated from operations, our Revolver, and our ability to raise capital under our universal shelf registration statement. Our near-term fixed commitments for cash expenditures consist primarily of payments under operating leases and inventory purchase commitments. As of the six months ended December 26, 2025, our working capital balance decreased $34.6 million, or 8%, as compared to the balance as of June 27, 2025.
Current wording
Our primary sources of liquidity come from existing cash and cash generated from operations, our Revolver, and our ability to raise capital under our universal shelf registration statement. Our near-term fixed commitments for cash expenditures consist primarily of payments under operating leases and inventory purchase commitments. As of March 27, 2026, our working capital balance decreased $14.3 million, or 3%, as compared to the balance as of June 27, 2025.
Previous wording
We have a 5-year Revolver with a maturity extended to November 4, 2030. The borrowing capacity as defined under the Revolver as of December 26, 2025 is the total availability of $850.0 million less outstanding borrowings of $591.5 million and outstanding letters of credit of $5.9 million. During the six months ended December 26, 2025, we made no borrowings or repayments. As of December 26, 2025, we were in compliance with all covenants and conditions under the Revolver.
Current wording
We have a 5-year Revolver with a maturity extended to November 4, 2030. 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. During the nine months ended March 27, 2026, we made no borrowings or repayments. As of March 27, 2026, we were in compliance with all covenants and conditions under the Revolver.
Previous wording
On August 13, 2024, we entered into a $60.0 million committed receivables purchase and servicing agreement (“RPSA”) with a new party. The RPSA has an initial term of two years. Pursuant to the RPSA, the new party has committed to purchase receivables at a discount from a list of certain of our customers, maintaining a balance of purchased receivables at or below $60.0 million. On December 10, 2025, the Company amended the RPSA to increase the facility from $60.0 million to $75.0 million. We had $75.0 million of factored accounts receivable, of which $42.7 million was included as a contra account within Accounts receivable, net of allowance for credit losses on our Consolidated Balance Sheet and $32.3 million was recorded in Due to factoring facility on our Consolidated Balance Sheet as of December 26, 2025. We incurred factoring fees of approximately $1.0 million during the six months ended December 26, 2025. We had $60.0 million of factored accounts receivable, of which $58.1 million was included as a contra account within Accounts receivable, net of allowance for credit losses on our Consolidated Balance Sheet and $1.9 million was recorded in Due to factoring facility on our Consolidated Balance Sheet as of December 27, 2024. We incurred factoring fees of approximately $0.8 million during the six months ended December 27, 2024.
Current wording
On August 13, 2024, we entered into a $60.0 million committed receivables purchase and servicing agreement (“RPSA”) with a new party. The RPSA has an initial term of two years. Pursuant to the RPSA, the new party has committed to purchase receivables at a discount from a list of certain of our customers, maintaining a balance of purchased receivables at or below $60.0 million. On December 10, 2025, the Company amended the RPSA to increase the facility from $60.0 million to $75.0 million. We had $75.0 million of factored accounts receivable, of which $60.9 million was included as a contra account within Accounts receivable, net of allowance for credit losses on our Consolidated Balance Sheet and $14.1 million was recorded in Due to factoring facility on our Consolidated Balance Sheet as of March 27, 2026. We incurred factoring fees of approximately $1.4 million during the nine months ended March 27, 2026. We had $60.0 million of factored accounts receivable, of which $55.1 million was included as a contra account within Accounts receivable, net of allowance for credit losses on our Consolidated Balance Sheet and $4.9 million was recorded in Due to factoring facility on our Consolidated Balance Sheet as of March 28, 2025. We incurred factoring fees of approximately $1.3 million during the nine months ended March 28, 2025.
Previous wording
On November 3, 2025, the Board of Directors authorized a new share repurchase program for the purchase of up to $200.0 million of our outstanding common stock. The program has no expiration date and repurchases may be made through open market or privately negotiated transactions from time to time at prevailing market prices. The timing and amount of repurchases will depend on market conditions and other factors. Repurchased shares are accounted for as authorized and unissued shares. All share repurchases are made in accordance with Rule 10b-18. During thesecond quarter and six months ended December 26, 2025, 221,510 shares of our common stock were repurchased under the share repurchase program at an average cost of $67.70 per share. As of December 26, 2025, there was $185.0 million available for future share repurchases under this share repurchase program.
Current wording
On November 3, 2025, the Board of Directors authorized a new share repurchase program for the purchase of up to $200.0 million of our outstanding common stock. The program has no expiration date and repurchases may be made through open market or privately negotiated transactions from time to time at prevailing market prices. The timing and amount of repurchases will depend on market conditions and other factors. Repurchased shares are accounted for as authorized and unissued shares. All share repurchases are made in accordance with Rule 10b-18. During the third quarter ended March 27, 2026, no shares of the Company's common stock were repurchased under the share repurchase program. During the nine months ended March 27, 2026, 221,510 shares of the Company's common stock were repurchased and immediately retired under the share repurchase program at an average cost of $67.70 per share. As of March 27, 2026, there was $185.0 million available for future share repurchases under this share repurchase program.
Previous wording
Our cash and cash equivalents increased by $25.9 million from June 27, 2025 to December 26, 2025, as the result of $53.8 million of cash provided by operating activities, partially offset by $15.0 million of cash paid in the purchase and retirement of common stock and $12.5 million invested in purchases of property and equipment.
Current wording
Our cash and cash equivalents increased by $22.7 million from June 27, 2025 to March 27, 2026, as the result of $60.2 million of cash provided by operating activities, partially offset by $20.7 million invested in purchases of property and equipment, $15.0 million of cash paid in the purchase and retirement of common stock, and $1.4 million of cash paid in the asset acquisition of a provider of specialized manufacturing processes.
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