Mercury Systems Begins Strategic Overhaul with Consultant Hire

Huber
Thomas Huber joins to lead Mercury’s “1MPACT” strategic review.
Credit: Mercury Systems

U.S. defense electronics specialist Mercury Systems has announced that consultant Thomas Huber has joined as executive vice president and chief transformation officer to lead the company’s recently announced overhaul.

Huber, whose role became effective Sept. 7, will lead Mercury’s “1MPACT” strategic review announced last month during its fourth-quarter fiscal 2021 earnings release, when it acknowledged a slowdown in organic business growth. Huber will report to CEO Mark Aslett.

Commenting on Huber’s addition to Mercury’s executive leadership team, Aslett said: “His expertise in large-scale transformations and operations will help lay the foundation for our next phase of value creation, with a goal of achieving Mercury’s full growth, margin expansion and adjusted [pretax earnings] potential over the course of the next five years.”

Huber was managing director and partner at the Boston Consulting Group, serving as a “core member” of their transformation and operations practice areas, according to Mercury’s announcement. Previously, he was managing director and Partner at Bain & Co., working with clients in strategy, operations, and mergers and acquisitions. At Mercury, Huber will focus on six major areas: organizational efficiency and scalability; procurement and supply chain optimization; facilities optimization; research and development investment efficiency; capital and asset efficiency; and scalable common processes and systems.

On Aug. 3, Mercury—which has been seen as a potential winner of U.S. protectionist and defense industrial base policy changes since the Trump administration—unveiled the 1MPACT project along with operating results for the fourth quarter and its fiscal 2021, which ended July 2, 2021. Net income for the fourth quarter of fiscal 2021 was $17.9 million, or $0.32 per share, compared with $27.2 million, or $0.49 per share, for the fourth quarter of fiscal 2020. Adjusted earnings per share was $0.73 per share for the fourth quarter of fiscal 2021, versus $0.72 the year before.

Financial analysts called the results “disappointing.” Aslett asserted the company “delivered a solid financial performance” but also announced the 1MPACT iniative, in part to help coordinate the company after 13 acquisitions in seven years.

“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,” Aslett said at the time. “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.”

1MPACT is expected to yield estimated annualized net savings of $30-50 million by fiscal 2025, according to Mercury, with roughly $22 million to be realized this fiscal year and included in the company’s full-year fiscal 2022 outlook.

The latest hire accompanies other executive changes. Didier Thibaud, Mercury’s chief operating officer, retired in August after 26 years at Mercury. 

The company’s strategy focusing on the Trump-era National Defense Strategy, as well as M&A system, are expected to remain the same. 1MPACT is supposed to help Mercury operate better, executives said.

Michael Bruno

Based in Washington, Michael Bruno is Aviation Week Network’s Senior Business Editor and Community and Conference Content Manager. He covers aviation, aerospace and defense businesses, their supply chains and related issues.