PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's discussion and analysis for M-tron Industries, Inc. Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for M-tron Industries, Inc., including the statements of operations, balance sheets, statements of equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, segment information, related party transactions, income taxes, debt, stock-based compensation, equity, EPS, commitments, inventory, property, and revenue breakdown. Condensed Consolidated Statements of Operations This section provides the company's unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024. Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $13,282 | $11,808 | $26,014 | $22,993 | | Total costs and expenses | $11,438 | $9,701 | $22,157 | $19,097 | | Operating income | $1,844 | $2,107 | $3,857 | $3,896 | | Net income | $1,560 | $1,744 | $3,190 | $3,230 | | Basic EPS | $0.55 | $0.64 | $1.12 | $1.19 | | Diluted EPS | $0.53 | $0.63 | $1.09 | $1.16 | Condensed Consolidated Balance Sheets This section presents the company's unaudited condensed consolidated balance sheets as of June 30, 2025, and December 31, 2024. Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Total assets | $39,692 | $36,488 | | Total liabilities | $4,879 | $5,216 | | Total stockholders' equity | $34,813 | $31,272 | | Cash and cash equivalents | $15,529 | $12,641 | Condensed Consolidated Statements of Equity This section details the changes in the company's stockholders' equity for the three and six months ended June 30, 2025 and 2024. Condensed Consolidated Statements of Equity (in thousands) | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | March 31, 2024 | | :-------------------- | :------------ | :------------- | :------------ | :------------- | | Total Equity | $34,813 | $33,151 | $23,660 | $21,715 | | Net income (Q2) | $1,560 | - | $1,744 | - | | Stock-based compensation expense (Q2) | $278 | - | $201 | - | | Warrant-related costs (Q2) | $(297) | - | $0 | - | Condensed Consolidated Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024. Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $4,462 | $3,456 | | Net cash used in investing activities | $(1,398) | $(995) | | Net cash (used in) provided by financing activities | $(176) | $127 | | Increase in cash and cash equivalents | $2,888 | $2,588 | | Cash and cash equivalents at end of period | $15,529 | $6,501 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering various accounting policies and financial details. 1. Background and Description of Business This note describes M-tron Industries, Inc.'s core business, products, primary markets, and manufacturing capabilities. - M-tron Industries, Inc. designs, manufactures, and markets highly engineered, high-reliability frequency and spectrum control products for electronic circuits26 - Primary markets include aerospace & defense, avionics, industrials, and space26 - Products include radio frequency, microwave and millimeter wave filters, various oscillators (OCXO, TCXO, VCXO), crystal resonators, Integrated Microwave Assemblies (IMA), and solid-state power amplifiers28 - Manufacturing facilities are located in Orlando, Florida; Yankton, South Dakota; and Noida, India, all ISO 9001:2015 and RoHS compliant. U.S. facilities are also ITAR registered and AS9100 Rev D certified, with Yankton also MIL-STD-790 certified29 2. Summary of Significant Accounting Policies This note outlines the company's key accounting policies and recent accounting pronouncements. - No material changes to significant accounting policies occurred during the three and six months ended June 30, 2025, compared to the 2024 Annual Report31 R&D Costs (in thousands) | R&D Costs | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development costs | $784 | $682 | $1,506 | $1,315 | - The Company adopted ASU 2023-07 (Segment Reporting) in December 2024, requiring enhanced segment disclosures retrospectively41 - Future accounting standards include ASU 2024-03 (Expense Disaggregation Disclosures) effective after December 15, 2026, and ASU 2023-09 (Income Tax Disclosures) effective after December 15, 2024, both currently being assessed for impact424344 3. Segment Information This note provides details on the company's operating segments and how performance is assessed by the Chief Operating Decision Maker. - The Chief Executive Officer is the Chief Operating Decision Maker (CODM)45 - The Company operates as a single reporting segment: Electronic Components, which includes filters, oscillators, crystal resonators, and integrated microwave assemblies4649 - The CODM assesses segment performance and allocates resources based on Segment gross profit and Net income, using these metrics to evaluate manufacturing costs, pricing, reinvestment decisions, budget adherence, and competitive analysis47 Segment Financials (in thousands) | Segment Financials | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $13,282 | $11,808 | $26,014 | $22,993 | | Segment gross profit | $5,792 | $5,501 | $11,198 | $10,280 | | Segment net income | $1,560 | $1,744 | $3,190 | $3,230 | | Total assets (as of period end) | $39,692 (June 30, 2025) | - | $36,488 (Dec 31, 2024) | - | 4. Related Party Transactions This note discloses financial transactions and balances with related parties, including GAMCO Investors, Inc. and The LGL Group, Inc. Related Party Transactions (in thousands) | Related Party Transactions | Three Months Ended June 30, 2025 (Income/Expense) | Three Months Ended June 30, 2024 (Income/Expense) | Six Months Ended June 30, 2025 (Income/Expense) | Six Months Ended June 30, 2024 (Income/Expense) | | :---------------------------------------- | :------------------------------------------------ | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | GAMCO Investors, Inc. | $127 / $0 | $45 / $0 | $241 / $0 | $79 / $0 | | The LGL Group, Inc. | $12 / $(10) | $12 / $27 | $24 / $16 | $24 / $53 | | Total | $139 / $(10) | $57 / $27 | $265 / $16 | $103 / $53 | Related Party Balances (in thousands) | Related Party Balances | June 30, 2025 (Assets/Liabilities) | December 31, 2024 (Assets/Liabilities) | | :------------------------------------ | :--------------------------------- | :------------------------------------- | | GAMCO Investors, Inc. | $13,356 / $0 | $10,415 / $0 | | The LGL Group, Inc. | $128 / $0 | $59 / $0 | | Total | $13,484 / $0 | $10,474 / $0 | - The Company earned $127 thousand and $241 thousand in interest income from investments with GAMCO Investors, Inc. for the three and six months ended June 30, 2025, respectively, an increase from $45 thousand and $79 thousand in the prior year periods55 - Mtron receives a net monthly payment of $4 thousand from LGL Group under the Amended and Restated Transitional Administrative and Management Services Agreement (Mtron TSA)5758 5. Income Taxes This note details the company's effective tax rates and the impact of recent tax legislation. Effective Tax Rate | Effective Tax Rate | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Effective Tax Rate | 21.8% | 18.7% | 22.4% | 19.4% | - Differences from the U.S. federal statutory rate of 21.0% are primarily due to research and development credits, permanent differences, and state taxes64 - The recently enacted One Big Beautiful Bill Act (OBBBA) introduces significant changes to the U.S. federal tax system, including restoration of 100% accelerated tax depreciation, immediate expensing of domestic R&E, and modifications to GILTI, FDII, and BEAT rates. The Company is assessing its potential impact656768 6. Revolving Credit Agreement This note describes the company's revolving line of credit with Fifth Third Bank. - Mtron has a revolving line of credit with Fifth Third Bank for up to $5,000 thousand, bearing interest at SOFR plus 2.25%, maturing June 15, 202669 - As of June 30, 2025, and December 31, 2024, there were no outstanding borrowings under this credit line70 7. Stock-Based Compensation This note provides information on stock-based compensation expense, unrecognized costs, and stock option grants. Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation Expense | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Restricted stock awards | $181 | $201 | $430 | $408 | | Stock options | $97 | $0 | $97 | $0 | | Total | $278 | $201 | $527 | $408 | - As of June 30, 2025, 193,916 shares remained available for future issuance under the 2022 Incentive Plan71 - Unrecognized compensation cost for unvested restricted shares was $1,440 thousand as of June 30, 2025, expected to be recognized over a weighted-average period of 1.7 years72 - Stock options granted in the six months ended June 30, 2025, had a weighted-average grant date fair value of $23.31, with an expected volatility of 74.5% and an expected term of 4.0 years7476 8. Stockholders' Equity This note details changes in the number of common shares outstanding. Shares Outstanding | Shares Outstanding | Six Months Ended June 30, 2025 | Year Ended December 31, 2024 | | :----------------- | :----------------------------- | :--------------------------- | | Beginning of period | 2,911,165 | 2,786,321 | | Stock-based compensation | 13,814 | 32,548 | | Exercise of stock options | 3,350 | 92,296 | | Restricted shares forfeited | (4,424) | 0 | | End of period | 2,923,905 | 2,911,165 | 9. Earnings per Share ("EPS") This note presents the basic and diluted earnings per share calculations. EPS (in thousands, except share data) | EPS | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $1,560 | $1,744 | $3,190 | $3,230 | | Basic EPS | $0.55 | $0.64 | $1.12 | $1.19 | | Diluted EPS | $0.53 | $0.63 | $1.09 | $1.16 | | Weighted average shares outstanding - basic | 2,853,383 | 2,728,599 | 2,848,419 | 2,723,293 | | Weighted average shares outstanding - diluted | 2,934,594 | 2,779,802 | 2,931,053 | 2,783,739 | - Warrants to purchase 582,233 shares of common stock were excluded from diluted EPS calculations for the three and six months ended June 30, 2025, as their inclusion would be antidilutive78 10. Commitments and Contingencies This note addresses potential liabilities from litigation and other commitments. - The Company records a liability for probable and estimable losses from litigation. As of June 30, 2025, there is no legal accrual for contingencies79 11. Other Financial Statement Information This note provides supplementary details on inventories and property, plant, and equipment. Inventories, Net (in thousands) | Inventories, Net | June 30, 2025 | December 31, 2024 | | :------------------------------ | :------------ | :---------------- | | Raw materials | $4,365 | $4,349 | | Work in process | $4,599 | $4,876 | | Finished goods | $1,737 | $1,720 | | Total gross inventory | $10,701 | $10,945 | | Reserve for excess and obsolete inventory | $(1,585) | $(1,436) | | Inventories, net | $9,116 | $9,509 | Property, Plant and Equipment, Net (in thousands) | Property, Plant and Equipment, Net | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :------------ | :---------------- | | Gross property, plant and equipment | $29,094 | $27,696 | | Less: Accumulated depreciation | $(23,155) | $(22,635) | | Property, plant and equipment, net | $5,939 | $5,061 | 12. Domestic and Foreign Revenues This note breaks down the company's revenues by domestic and foreign geographical regions. Revenues (in thousands) | Revenues | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Malaysia | $1,471 | $1,426 | $2,730 | $2,308 | | Australia | $1,140 | $645 | $1,203 | $1,419 | | Greece | $292 | $0 | $537 | $388 | | All other foreign countries | $846 | $712 | $1,668 | $1,338 | | Total foreign revenues | $3,749 | $2,783 | $6,138 | $5,453 | | Total domestic revenues | $9,533 | $9,025 | $19,876 | $17,540 | - Total foreign revenues increased by 34.7% for the three months ended June 30, 2025, and by 12.6% for the six months ended June 30, 2025, compared to the prior year periods83 13. Subsequent Events This note discloses any significant events occurring after the balance sheet date. - The Company did not identify any subsequent events requiring adjustment or disclosure in the consolidated financial statements after the balance sheet date through the issuance date84 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial performance, condition, and operational results for the three and six months ended June 30, 2025, compared to the prior year. It covers revenue drivers, cost changes, profitability, backlog growth, non-GAAP measures like Adjusted EBITDA, and an analysis of liquidity and capital resources, including cash flow activities and the revolving credit facility. Overview This section provides a brief overview of M-tron Industries, Inc.'s business and market focus. - Mtron designs, manufactures, and markets highly-engineered, high reliability frequency and spectrum control products for aerospace & defense, avionics, industrials, and space markets88 Trends and Uncertainties This section discusses key trends and uncertainties, including the impact of tariffs on the company's operations. - Tariffs imposed by the U.S. federal administration and retaliatory tariffs from foreign governments have caused an increase in Manufacturing cost of sales, but are not anticipated to have a material impact on operations90 - The Company is seeking exemptions and evaluating alternative material sources to mitigate tariff impacts90 Results of Operations This section analyzes the company's financial performance, including revenues, costs, operating income, and net income for the periods presented. Results of Operations (in thousands) - Three Months Ended June 30 | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | $ Change | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :------- | | Revenues | $13,282 | $11,808 | $1,474 | 12.5% | | Manufacturing cost of sales | $7,490 | $6,307 | $1,183 | 18.8% | | Engineering, selling and administrative | $3,948 | $3,394 | $554 | 16.3% | | Total costs and expenses | $11,438 | $9,701 | $1,737 | 17.9% | | Operating income | $1,844 | $2,107 | $(263) | -12.5% | | Net income | $1,560 | $1,744 | $(184) | -10.6% | | Gross margin | 43.6% | 46.6% | -298 bps | | Results of Operations (in thousands) - Six Months Ended June 30 | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | $ Change | % Change | | :-------------------- | :----------------------------- | :----------------------------- | :------- | :------- | | Revenues | $26,014 | $22,993 | $3,021 | 13.1% | | Manufacturing cost of sales | $14,816 | $12,713 | $2,103 | 16.5% | | Engineering, selling and administrative | $7,341 | $6,384 | $957 | 15.0% | | Total costs and expenses | $22,157 | $19,097 | $3,060 | 16.0% | | Operating income | $3,857 | $3,896 | $(39) | -1.0% | | Net income | $3,190 | $3,230 | $(40) | -1.2% | | Gross margin | 43.0% | 44.7% | -166 bps | | - Revenue increases for both periods were primarily driven by strong defense program product and solution shipments9298 - Gross margin decreased due to product mix and the impact of tariffs9399 - Total other income, net, increased significantly for both periods, primarily due to higher interest income from investments in money market mutual funds94103 Backlog This section reports on the company's order backlog and its changes over time. Backlog (in thousands) | Backlog | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--------------------- | :------------ | :---------------- | :------------ | | Order backlog | $61,199 | $47,239 | $45,322 | - Backlog increased by $13,960 thousand (29.6%) from December 31, 2024, and by $15,877 thousand (35.0%) from June 30, 2024, reflecting continued strength in aerospace & defense and avionics customer orders101 Non-GAAP Financial Measures This section presents and reconciles non-GAAP financial measures, specifically Adjusted EBITDA, used by management to assess performance. - Adjusted EBITDA is a non-GAAP measure used to understand operational results, excluding interest income/expense, depreciation, amortization, non-cash stock-based compensation, and other discrete items105107 Adjusted EBITDA (in thousands) | Adjusted EBITDA | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Income before income taxes | $1,995 | $2,146 | $4,109 | $4,009 | | EBITDA | $2,141 | $2,322 | $4,394 | $4,377 | | Adjusted EBITDA | $2,419 | $2,523 | $4,921 | $4,785 | - Adjusted EBITDA decreased by $104 thousand for the three months ended June 30, 2025, primarily due to lower gross margins and higher interest income, partially offset by higher depreciation and stock-based compensation105 - Adjusted EBITDA increased by $136 thousand for the six months ended June 30, 2025, driven by higher revenues, depreciation, and stock-based compensation, partially offset by higher interest income106 Liquidity and Capital Resources This section discusses the company's cash position, cash flow activities, and ability to meet its financial obligations. - Cash and cash equivalents increased to $15,529 thousand as of June 30, 2025, from $12,641 thousand as of December 31, 2024110 Cash Flow Activity (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Cash provided by operating activities | $4,462 | $3,456 | | Cash used in investing activities | $(1,398) | $(995) | | Cash (used in) provided by financing activities | $(176) | $127 | | Net change in cash and cash equivalents | $2,888 | $2,588 | - Operating cash flow increased by $1,006 thousand, primarily due to increased stock-based compensation and a positive net change in operating assets and liabilities112115 - Investing cash flow increased by $403 thousand, mainly due to higher capital expenditures for growth, product development, and operational efficiencies113 - Financing cash flow decreased by $303 thousand, primarily due to costs incurred related to warrant issuance in April 2025114 - The Company believes existing cash, marketable securities, and cash from operations will provide sufficient liquidity for the next 12 months. The Board of Directors maintains a policy of not paying cash dividends116117 Critical Accounting Estimates This section addresses the company's critical accounting estimates and any material changes. - No material changes to critical accounting estimates were disclosed compared to the Annual Report on Form 10-K filed on March 27, 2025121 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no applicable quantitative and qualitative disclosures about market risk for the company. - This item is not applicable for the Company122 Item 4. Controls and Procedures This section details the evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting. Evaluation of Disclosure Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures. - As of June 30, 2025, the Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective124 Changes in Internal Control Over Financial Reporting This section discusses any changes in the company's internal control over financial reporting during the quarter. - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting126 PART II. OTHER INFORMATION This section covers legal proceedings, other information, exhibits, and signatures for the quarterly report. Item 1. Legal Proceedings This section states that the company is not aware of any material pending legal proceedings beyond ordinary routine litigation incidental to its business. - The Company is not aware of any material pending legal proceedings, other than ordinary routine litigation incidental to its business128 Item 5. Other Information This section confirms that no directors or officers adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter. - No directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025129 Item 6. Exhibits This section lists all exhibits included or incorporated by reference in the Quarterly Report on Form 10-Q, including organizational documents, warrant agreements, and certifications. - Exhibits include the Amended and Restated Separation and Distribution Agreement, Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Warrant Agreement, and certifications from the Principal Executive Officer and Principal Financial Officer130 SIGNATURES This section contains the signatures of the authorized officers, confirming the due submission of the report. - The report was signed by Cameron Pforr, Interim Chief Executive Officer and Chief Financial Officer, on August 12, 2025136
M-tron Industries(MPTI) - 2025 Q2 - Quarterly Report