U.S. Navy Selects Mercury to Deliver Electronic Warfare Combat Training Subsystems

Rhea-AI Summary

Mercury Systems, Inc. secures a $243.8 million contract to deliver electronic attack training subsystems for the Naval Air Warfare Center, enhancing pilot training capabilities with advanced jamming technology. The contract spans five years and includes ongoing engineering services for threat library updates.

Defense Industry Analyst

The announcement of Mercury Systems' multi-year contract with the Naval Air Warfare Center Weapons Division signifies a substantial commitment to enhancing the U.S. Navy's electronic warfare training capabilities. The contract's value, at $243.8 million, represents a significant revenue stream for Mercury Systems, which is likely to positively influence their financial outlook over the next five years.

The use of digital RF memory (DRFM)-based reactive jamming subsystems is critical in creating realistic training environments. DRFM technology is pivotal for simulating electronic threats in a controlled setting, thereby providing pilots with the experience needed to counteract near-peer adversarial capabilities. The contract's focus on updating and maintaining a current threat library also underscores the dynamic nature of electronic warfare, where threats continuously evolve.

For investors, this contract could be seen as a strong indicator of Mercury Systems' competitive position in the defense technology market. Given the long-standing relationship with the Navy's Airborne Threat Simulation Organization, Mercury's track record of over 600 systems delivered in the past decade demonstrates their reliability as a defense partner. This could potentially lead to further contracts and collaborations, enhancing the company's growth prospects.

Financial Analyst

From a financial perspective, the contract with an indefinite delivery/indefinite quantity (IDIQ) nature offers a flexible framework, allowing the Navy to order more or fewer units as required over the contract period. This flexibility can help stabilize Mercury Systems' revenue streams while also providing potential for upside if the Navy's needs increase.

Investors should note that contracts of this magnitude can have material impacts on the company's stock performance. The initial $20.3 million DRFM production order sets a positive precedent for the contract's implementation phase. Furthermore, the ongoing engineering services included in the contract suggest a sustained income source beyond the hardware delivery, which is beneficial for the company's long-term financial health.

Considering the current geopolitical climate and increased focus on defense spending, Mercury Systems may see an uptick in demand for its electronic warfare and processing technologies. This could lead to upward revisions in earnings forecasts and potentially increase investor confidence in the company's stock.

Market Research Analyst

Electronic warfare and pilot training are critical components of modern military strategy and the demand for advanced training systems is on the rise. The contract awarded to Mercury Systems aligns with the broader industry trend of increased investment in next-generation defense technology.

Mercury Systems' emphasis on near-peer jamming and electronic warfare capabilities reflects the shifting focus of military training towards high-fidelity simulations of current and emerging threats. By providing the Navy with the ability to emulate NASIC-validated threats, Mercury is positioning itself as a leader in the field of electronic warfare training—a niche but growing segment within the defense industry.

As nations continue to invest in advanced military capabilities, companies like Mercury Systems that offer cutting-edge solutions are likely to benefit. The contract may also serve as a benchmark for other defense contractors, potentially influencing future procurement decisions and shaping the competitive landscape.

ANDOVER, Mass., March 01, 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 that it received a five-year, $243.8 million, indefinite delivery/indefinite quantity contract to deliver rapidly reprogrammable electronic attack training subsystems for the Naval Air Warfare Center Weapons Division. These subsystems build on more than 25 years of test and training technology from the Mercury Processing Platform to bring the most advanced, near-peer jamming and electronic warfare capabilities to U.S. pilot training organizations.

The most effective way to prepare pilots and aircrews for real-world combat environments is through training scenarios that represent near-peer threat capabilities to the greatest possible extent. Mercury’s proven digital RF memory (DRFM)-based reactive jamming subsystems allow training planners to quickly reprogram missions for different aircraft via an intuitive software interface and simultaneously emulate multiple National Air and Space Intelligence Center (NASIC)-validated threats. Mercury has provided radar jamming capabilities to the Navy’s Airborne Threat Simulation Organization (ATSO) since 1987 and has delivered more than 600 systems over the past decade.

Mercury received the initial $20.3 million DRFM production order from ATSO. The new contract also includes ongoing engineering services to continually update the system’s threat library to stay ahead of adversarial capabilities.

“The electronic warfare capabilities of near-peer adversaries are more sophisticated than ever before, and our combat pilots must train using technology that emulates the most advanced jamming threats,” said Roya Montakhab, GM of Mercury’s Platform Systems business unit. “We look forward to working with the Navy’s Airborne Threat Simulation Office to provide our pilots with a mission-critical advantage on the battlefield.”

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 24 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 under a refreshed Board and leadership team. 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 such as semiconductors, 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, such as the deductibility of internal research and development, 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 30, 2023 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
Nelson Erickson
Senior Vice President, Strategy and Corporate Development
Nelson.Erickson@mrcy.com

MEDIA CONTACT
Turner Brinton
Sr. Director of Corporate Communications
Turner.Brinton@mrcy.com

What contract did Mercury Systems, Inc. secure recently?

Mercury Systems, Inc. secured a five-year, $243.8 million contract to deliver electronic attack training subsystems for the Naval Air Warfare Center.

What technology does Mercury Systems provide?

Mercury Systems delivers mission-critical processing power to the edge, offering advanced technologies for aerospace and defense missions.

How does Mercury Systems' digital RF memory-based reactive jamming subsystems benefit pilot training?

Mercury's reactive jamming subsystems allow training planners to quickly reprogram missions for different aircraft and emulate multiple threats, enhancing pilot training capabilities.

Where is Mercury Systems headquartered?

Mercury Systems is headquartered in Andover, Massachusetts.

What is the ticker symbol for Mercury Systems, Inc.?

The ticker symbol for Mercury Systems, Inc. is MRCY.