Mercury : Q4 2021 Press Release

FOR IMMEDIATE RELEASE

Mercury Systems Reports Fourth Quarter and Fiscal 2021 Results

Fourth Quarter Highlights Include:

Revenues of $251 million increased 15% over prior year

Bookings of $260 million yielding book-to-bill of 1.04

Backlog of over $900 million entering fiscal 2022

Completed the acquisition of Pentek

Launched 1MPACT value creation initiative

ANDOVER, Mass. August 3, 2021 Mercury Systems, Inc. (NASDAQ: MRCY, www.mrcy.com), reported operating results for the fourth quarter and fiscal year 2021, ended July 2, 2021.

Management Comments

"The Company delivered a solid financial performance in the fourth quarter and completed fiscal 2021 with strong financial results," said Mark Aslett, Mercury's President and Chief Executive Officer. "We achieved strong bookings in the quarter yielding a book-to-bill of 1.04 and backlog of over $900 million entering fiscal 2022. In addition, we completed the acquisition of Pentek, which deepens our penetration into core radar, electronic warfare and signals intelligence markets. As expected, the quarter and fiscal year were more challenging as a result of program delays which are likely to also impact fiscal 2022."

Mercury Reports Fourth Quarter and Fiscal 2021 Results, Page 2

Fourth Quarter Fiscal 2021 Results

Total Company fourth quarter fiscal 2021 revenues were $250.8 million, compared to $217.4 million in the fourth quarter of fiscal 2020. The fourth quarter fiscal 2021 results included an aggregate of approximately $40.8 million of revenue attributable to the Physical Optics Corporation and Pentek acquired businesses.

Total Company GAAP net income for the fourth quarter of fiscal 2021 was $17.9 million, or $0.32 per share, compared to $27.2 million, or $0.49 per share, for the fourth quarter of fiscal 2020. Adjusted earnings per share ("adjusted EPS") was $0.73 per share for the fourth quarter of fiscal 2021, compared to $0.72 per share in the fourth quarter of fiscal 2020.

Fourth quarter fiscal 2021 adjusted EBITDA for the total Company was $59.1 million, compared to $49.6 million for the fourth quarter of fiscal 2020.

Cash flows from operating activities in the fourth quarter of fiscal 2021 were $27.2 million, compared to $28.7 million in the fourth quarter of fiscal 2020. Free cash flow, defined as cash flows from operating activities less capital expenditures for property and equipment, was $16.3 million for the fourth quarter of fiscal 2021 and $17.2 million for the fourth quarter of fiscal 2020.

All per share information is presented on a fully diluted basis.

50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | [phone] | www.mrcy.com| twitter: @MRCY

Mercury Reports Fourth Quarter and Fiscal 2021 Results, Page 3

Full Year Fiscal 2021 Results

Full year fiscal 2021 revenues were $924.0 million, compared to $796.6 million for full year fiscal 2020. The full year fiscal 2021 results include organic revenue of $835.6 million, an increase of 5% from fiscal 2020. Organic revenue represents total company revenue excluding net revenue from acquisitions for the first four full quarters since the entity's acquisition date (which excludes any intercompany transactions). After the completion of four full fiscal quarters, acquired businesses are treated as organic for current and comparable historical periods.

Total Company GAAP net income for fiscal 2021 was $62.0 million, or $1.12 per share, compared to $85.7 million, or $1.56 per share, for fiscal 2020. Adjusted earnings per share ("adjusted EPS") was $2.42 per share for fiscal 2021, compared to $2.30 per share for fiscal 2020.

Fiscal 2021 adjusted EBITDA for the total Company was $201.9 million, compared to $176.2 million for fiscal 2020.

Cash flows from operating activities for 2021 were $97.2 million, compared to $115.2 million in fiscal 2020. Free cash flow was $51.6 million for fiscal 2021, compared to $71.9 million for fiscal 2020.

Bookings and Backlog

Total bookings for the fourth quarter of fiscal 2021 were $260.2 million, yielding a book-to-bill ratio of 1.04 for the quarter.

Mercury's total backlog at July 2, 2021 was $909.6 million, a $78.5 million increase from a year ago. Of the July 2, 2021 total backlog, $530.0 million represents orders expected to be shipped within the next 12 months.

50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | [phone] | www.mrcy.com| twitter: @MRCY

Mercury Reports Fourth Quarter and Fiscal 2021 Results, Page 4

1MPACT Initiative

Mr. Aslett continued, "Over the past seven years since fiscal 2014, we've completed 13 acquisitions deploying $1.2 billion in capital, dramatically scaling and transforming the business as a result. As we cross the $1 billion revenue threshold, we're taking proactive steps with an eye towards repeating what we have done over the past seven years. This afternoon we announced a companywide effort, that we've called 1MPACT, to lay the foundation for our next phase of value creation at scale, with a goal of achieving Mercury's full growth, margin expansion and adjusted EBITDA potential over the course of the next five years. 1MPACT will be led by a new Chief Transformation Officer (CTO) reporting to me."

"Early in the third quarter of fiscal 2021, we engaged a tier 1 consulting firm to do a full assessment of the Company and size our value creation potential. The assessment identified that in order to scale, it was necessary to consolidate and streamline the Company's organizational structure to improve visibility, speed of decision making and accountability. Therefore, starting in the fourth quarter of fiscal 2021 and accelerating in the first quarter of fiscal 2022, we acted on the first 1MPACT opportunity to realign our organizational structure. As 1MPACT progresses over the next few years, we will focus on six major areas: organizational efficiency and scalability; procurement and supply chain optimization; facilities optimization; R&D investment efficiency; capital and asset efficiency; and scalable common processes and systems. These actions are in their planning phases and we'll provide updates as they progress."

"From a financial standpoint, 1MPACT is expected to yield estimated annualized net savings of $30-50 million by fiscal 2025, with approximately $22 million of this total expected to be realized in fiscal 2022 and included in the Company's full-year fiscal 2022 outlook. Going forward, we'll continue to reinvest some of the gross savings in people and business systems to enable further scalability."

50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | [phone] | www.mrcy.com| twitter: @MRCY

Mercury Reports Fourth Quarter and Fiscal 2021 Results, Page 5

"We remain aligned with the national defense strategy and modernization, including speed and affordability objectives, and our M&A pipeline is robust. Given the multiple capability-led acquisitions since fiscal 2014, and the near-term program delays, this is a perfect time to capture the scale, cost and process efficiencies. Our long-term outlook remains intact and our strategy remains the same: to deliver strong margins while growing the business organically and supplementing this organic growth with disciplined M&A and full integration. We've launched 1MPACT to change the way we fundamentally do business with a goal of setting the stage for rapid organic and inorganic growth over the next five years."

Changes to Mercury's Leadership

Didier Thibaud, Mercury's Executive Vice President and Chief Operating Officer (COO), is retiring after 26 years at Mercury. Mr. Thibaud will remain EVP and COO of Mercury until August 26, 2021, at which point he will serve as a strategic advisor to CEO Mark Aslett, while also working closely with leadership for a smooth and orderly transition. The leaders of the Processing and Microelectronics divisions will report to Mr. Aslett.

Mr. Thibaud said, "It's been my great privilege to work alongside the wonderful team at Mercury. I couldn't be more proud of the work we do in partnership with our customers, improving technology access to aerospace and defense and enabling more innovative and affordable solutions."

"Didier's contributions and counsel have been instrumental to our growth and success. We extend to him our sincerest thanks and wish him well in retirement," said Mark Aslett. "Didier has exemplified impressive leadership over his meaningful career at Mercury. His commitment to delivering for our customers and building a culture of innovation will be felt for many years to come."

50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | [phone] | www.mrcy.com| twitter: @MRCY