M-tron Industries(MPTI) - 2024 Q3 - Quarterly Results

Executive Summary Third Quarter 2024 Highlights M-tron Industries reported strong Q3 2024 financial results, driven by defense orders and efficiencies | Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) | Chunk Num | | :----------------- | :------------- | :------------- | :------------- | :--------- | :-------- | | Revenues | $13,214,000 | $10,888,000 | $2,326,000 | 21.4% | [1] | | Gross Margin | 47.8% | 42.8% | 500 bps | - | [1] | | Net Income per Diluted Share | $0.81 | $0.57 | $0.24 | 42.1% | [1] | - Revenues continue to be driven by defense-related orders[2] - Strategic investments in research and development were made possible by improved operating efficiencies, aiming to drive future growth[2] Fiscal Year 2024 Outlook The Company anticipates strong Q4 2024 performance, raising full-year revenue guidance and expecting robust EBITDA - MtronPTI anticipates a strong performance in Q4 2024 and expects to exceed its prior guidance for FY 2024[1] - Revenues, new orders, and earnings are expected to remain strong for FY 2024[2] | Metric | New FY 2024 Guidance | Previous FY 2024 Guidance | Chunk Num | | :----------------- | :------------------- | :------------------------ | :-------- | | Revenues | $46.0 million to $48.0 million | $43.0 million to $45.0 million | [10] | | EBITDA Margin | 19% to 21% | - | [10] | Financial Performance Analysis Third Quarter 2024 Results Q3 2024 saw significant financial improvements, driven by defense shipments, production, and product mix Revenues | Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) | Chunk Num | | :------- | :------------- | :------------- | :------------- | :--------- | :-------- | | Revenues | $13,214,000 | $10,888,000 | $2,326,000 | 21.4% | [1] | - Revenue growth was primarily driven by continued strong defense program product and solution shipments[3] Gross Margin | Metric | Q3 2024 | Q3 2023 | Change (bps) | Chunk Num | | :----------- | :------ | :------ | :----------- | :-------- | | Gross Margin | 47.8% | 42.8% | 500 | [1] | - The increase in gross margin was primarily due to higher revenues, improved production efficiencies from previous investments, and an improved product mix towards higher-margin products[4] Net Income and EPS | Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) | Chunk Num | | :----------------- | :------------- | :------------- | :------------- | :--------- | :-------- | | Net Income | $2,267,000 | $1,586,000 | $681,000 | 42.9% | [3] | | Net Income per Diluted Share | $0.81 | $0.57 | $0.24 | 42.1% | [1] | - The increase in net income was primarily due to strong defense program product and solution shipments[3] - Higher Engineering, selling, and administrative expenses resulted from increased investment in research and development, higher sales commissions, and increased administrative and corporate expenses consistent with overall business growth[3] Adjusted EBITDA | Metric | Q3 2024 | Q3 2023 | Change ($) | Change (%) | Chunk Num | | :------------- | :------------- | :------------- | :------------- | :--------- | :-------- | | Adjusted EBITDA | $3,300,000 | $2,336,000 | $964,000 | 41.3% | [5] | - The increase in Adjusted EBITDA was primarily due to improved gross margins and continued containment of operating expenses (excluding strategic R&D investments), leading to higher income before taxes, higher depreciation, and higher stock-based compensation, partially offset by higher interest income[5] Nine Months Ended September 30, 2024 Results MtronPTI showed strong growth in net income, gross margin, and Adjusted EBITDA, driven by defense sales Net Income and EPS | Metric | YTD 2024 | YTD 2023 | Change ($) | Change (%) | Chunk Num | | :----------------- | :------------- | :------------- | :------------- | :--------- | :-------- | | Net Income | $5,497,000 | $3,416,000 | $2,081,000 | 60.9% | [6] | | Net Income per Diluted Share | $1.97 | $1.25 | $0.72 | 57.6% | [6] | - The increase was primarily due to higher sales related to strong defense program product shipments, partially offset by higher manufacturing cost of sales and increased Engineering, selling, and administrative expenses due to R&D investments, sales commissions, and administrative costs supporting revenue growth[6] Gross Margin | Metric | YTD 2024 | YTD 2023 | Change (bps) | Chunk Num | | :----------- | :------- | :------- | :----------- | :-------- | | Gross Margin | 45.8% | 39.7% | 610 | [7] | - The increase in gross margin was primarily due to higher revenues, improved production efficiencies, and a higher margin product mix[7] Adjusted EBITDA | Metric | YTD 2024 | YTD 2023 | Change ($) | Change (%) | Chunk Num | | :------------- | :------------- | :------------- | :------------- | :--------- | :-------- | | Adjusted EBITDA | $8,085,000 | $5,295,000 | $2,790,000 | 52.7% | [8] | - The increase was primarily due to higher gross margins and continued containment of operating expenses, resulting in higher income before income taxes, higher depreciation, and higher stock-based compensation, partially offset by higher interest income[8] Backlog The Company's backlog decreased, reflecting a strategic focus on large, long-duration program-centric business | Date | Backlog ($) | Chunk Num | | :--------------- | :------------- | :-------- | | September 30, 2024 | $39,763,000 | [9] | | December 31, 2023 | $47,831,000 | [9] | | September 30, 2023 | $50,280,000 | [9] | - The decrease in backlog reflects a continued strategy and focus on securing large, long-duration program-centric business, which can materially affect backlog due to the timing and size of these orders[9] Financial Statements Condensed Consolidated Statements of Operations The Statements of Operations detail revenues, costs, and net income for Q3 and YTD 2024 vs 2023, showing growth | (in thousands, except share data) | Three Months Ended September 30, 2024 | Three Months Ended September 30, 2023 | Nine Months Ended September 30, 2024 | Nine Months Ended September 30, 2023 | | :-------------------------------- | :------------------------------------ | :------------------------------------ | :----------------------------------- | :----------------------------------- | | Revenues | $13,214 | $10,888 | $36,207 | $30,395 | | Manufacturing cost of sales | 6,904 | 6,230 | 19,617 | 18,322 | | Engineering, selling and administrative | 3,389 | 2,625 | 9,773 | 7,714 | | Total costs and expenses | 10,293 | 8,855 | 29,390 | 26,036 | | Operating income | 2,921 | 2,033 | 6,817 | 4,359 | |