Mercury : Q4 2021 Presentation

FOURTH QUARTER AND FISCAL YEAR 2021 FINANCIAL RESULTS

Mark Aslett

President and CEO

Michael Ruppert

Executive Vice President and CFO

August 3, 2021, 5:00 pm ET

Webcast login at www.mrcy.com/investor

Webcast replay available by 7:00 p.m. ET August 3, 2021

© Mercury Systems, Inc.

Forward-looking safe harbor statement

This presentation contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the acquisitions described herein and to fiscal 2021 business performance and beyond and the Company's plans for growth, cost savings, and improvement in profitability and cash flow. You can identify these statements by the use of 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 epidemics and pandemics such as COVID, effects of any U.S. federal government shutdown or extended continuing resolution, effects of continued geopolitical unrest and regional conflicts, competition, changes in technology and methods of marketing, delays in completing 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 of enforcement of environmental rules and regulations, market acceptance of the Company's products, shortages in or delays in receiving components, production delays or unanticipated expenses due to performance quality issues with outsourced components, inability to fully realize the expected benefits from acquisitions, restructurings and value creation initiatives such as 1MPACT, or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, increases in interest rates, changes to industrial security and cyber-security regulations and requirements, 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, 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 July 3, 2020. 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.

Use of Non-GAAP (Generally Accepted Accounting Principles) Financial Measures

In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides adjusted EBITDA, adjusted income, adjusted EPS, free cash flow, organic revenue and acquired revenue, which are non-GAAP financial measures. Adjusted EBITDA, adjusted income, and adjusted EPS exclude certain non-cash and other specified charges. The Company believes these non-GAAP financial measures are useful to help investors better understand its past financial performance and prospects for the future. However, these non-GAAP measures should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Management believes these non-GAAP measures assist in providing a more complete understanding of the Company's underlying operational results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company's business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals. A reconciliation of GAAP to non-GAAP financial results discussed in this presentation is contained in the Appendix hereto.

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Delivered strong Q4 and fiscal 2021 results

• FY21: 16% revenue growth, net income down 28%, 15% adjusted EBITDA growth
• Another strong year for new design wins; estimated lifetime value $1.5 billion
• Five-yearplan remains intact; expect high single-digit to low double-digit organic growth
• Completed 13 acquisitions since fiscal '14, creating substantial value for shareholders
• Launched 1MPACT to achieve full growth, margin expansion and adj. EBITDA potential

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Q4 and FY21 results

Q4 FY21 VS. Q4 FY20

• Bookings decreased 7%
• Backlog increased 9%
• Revenue up 15%
• Organic revenue(1) down 3%
• GAAP net income down 34%
• Adjusted EBITDA up 19%
• Op cash of $27.2M
• FCF of $16.3M; 28% of adj. EBITDA

FY21 VS. FY20

• Bookings decreased 8%
• Backlog increased 9%
• Revenue up 16%
• Organic revenue (1) up 5%
• GAAP net income down 28%
• Adjusted EBITDA up 15%
• Op cash of $97.2M
• FCF of $51.6M; 26% of adj. EBITDA

Notes

1. Organic revenue represents total company revenue excluding net revenue from acquisitions for the first four full quarters since the entities' acquisition date (which excludes any intercompany transactions). After the completion of four fiscal quarters, acquired businesses are treated as organic for current and comparable historical periods.

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FY22 business outlook

• Taking more conservative stance on organic growth outlook
• Further reduced revenues from SEWIP and other Naval upgrades, F-35 and FMS
• Biggest change since last quarter is LTAMDS has moved to FY23
• Now expect flat organic growth and ~10% total company growth
• Expect total revenue >$1B as well as record adjusted EBITDA and margin expansion
• Foresee significant bookings growth with positive book-to-bill and substantial backlog growth
• Anticipate design wins to again total more than $1B in estimated lifetime value
• Expect FY23 organic growth to rebound to more normal levels - high single-digit to low double-digit

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