Mercury Systems, Inc. (NASDAQ:MRCY) Q2 2023 Earnings Call Transcript

Mark Aslett: Yes. So I mean, look, it’s a possibility, obviously, with just what we are now. But I do think that we’ve got a fair amount of hiring momentum inside of the company. I think there’s obviously a lot of growth ahead of us and I think we’re a great company to work for. So I don’t see nothing thoroughly at a major challenge with respect to sort of retention, only attraction side of things I think we’re really focused on two areas. One is on the direct labor side of things. And I don’t really believe that the announcements that we made this morning, sorry, this afternoon around here the potential process will have an impact there. Probably the more challenging areas on the engineering side. But again I think we’ve got a great employee value proposition. And I feel pretty confident just based upon the momentum that we’re going to be able to do actually make the highest that we need.

Michael Ciarmoli: Got it. Got it. And it just to follow up entirely separate. You guys have obviously, you talked about the demand environment, we’ve seen a very strong book to Bill, the last several quarters. How are you thinking about the bookings environment over the back half of the year, especially now with a budget in place?

Mark Aslett: Yes. So I think we’re expecting, again, strong bookings sequentially H2 over H1, Mike, I think just with some of the reasons chips falling anymore the growth in the fourth quarter, just given some of the movements that we’ve seen but we’re expecting strong growth year-over-year with a positive book to bill. So I think this is not a demand issue. Obviously, the demand environment is very strong. If anything, these are kind of short term timing issues, and really a result of the cumulative effects of the pandemic.

Michael Ciarmoli: Got it. Then to be clear, you think you can do that 600, almost 30 million and booking second half last year, you think you guys can do better than that, what you’re saying.

Mark Aslett: So this year, if you look at H1 was far stronger than the prior year. So the waiting of bookings was far more balanced. So for the year, we do expect bookings to be up substantially just given the waiting H1, H2, I think it’s really more of a sequential story than it is year-over-year in H2.

Michael Ciarmoli: Got it. Helpful. Thanks, guys.

Mark Aslett: Yes, thanks, Mike.

Operator: Your next question comes from the line of Austin Moeller with Canaccord. Your line is now open.

Austin Moeller: Hi, good afternoon, Mark, and Mike.

Mark Aslett: Hey, Austin, how are you?

Austin Moeller: Doing great. Just so my first question here, if we just stay on the topic of the supply chain, if we do continue to see lead times come down I mean, I know it was sort of an incremental improvement in the second quarter, but it’s still notable. Do you expect you’re going to be reducing inventory stockpiling if lead times continue to fall? And do you expect as we go into potentially a recession here, that materials costs might come down from Mercury?

Speaker: Mike, you take the first and I will take the second one.