M-tron Industries(US:MPTI)2025-11-13 16:30Financial Data and Key Metrics Changes - Total revenues for Q3 2025 were $14.2 million, a 7.2% increase from $13.2 million in Q3 2024, driven by strong growth in avionics, space, and industrial product shipments [5] - Gross margins for Q3 2025 were 44.3%, down from 47.8% in Q3 2024, primarily due to product mix and higher tariff-related costs [5] - Net income for Q3 2025 was $1.8 million, or $0.63 per diluted share, compared to $2.3 million, or $0.81 per diluted share in Q3 2024, affected by a reversal of a deferred tax asset and lower gross margins [6] - Adjusted EBITDA for Q3 2025 was $3.2 million, slightly down from $3.3 million in the prior year's September quarter [6] - Backlog as of September 30, 2025, was $58.8 million, a 48% increase from $39.8 million on September 30, 2024, and a 24.5% increase from $47.2 million at the end of 2024 [7] Business Line Data and Key Metrics Changes - The company reported continued strength in defense-related orders, with growth also seen in avionics, space, and industrial sectors [4][5] - Specific growth in industrials was noted in test and measurement, oil and gas, and telecom markets, with recent revenues driven by test and measurement [17] Market Data and Key Metrics Changes - The company is experiencing robust demand across aerospace and defense programs, with significant orders from major aircraft manufacturers like Boeing and Airbus [18] - The company is involved in over 40 programs of record, many of which are sole-source programs, indicating a strong market position in defense spending [8] Company Strategy and Development Direction - The company is focusing on moving into more program business, which constitutes the majority of its aerospace and defense revenue [8] - Strategic investments in research and development are being made to enhance engineering capabilities and drive revenue growth [16] - The company is innovating with new products, such as internally compensated oscillators, which are smaller and in high demand [10] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued growth in defense spending, particularly in electronic warfare and radar systems, with expectations to double revenue in these areas next year [8] - The company is adapting to tariff challenges, which are expected to impact gross margins by 1-1.5% of revenue, and is implementing strategies to mitigate these costs [19][20] Other Important Information - The company announced a dividend of warrants that are exercisable through December 11, 2025, with a strike price of $4,750 per share [7] - Upcoming presentations at various investor conferences were mentioned, indicating ongoing engagement with the investment community [11] Q&A Session Summary Question: Specific areas of increased R&D spending - Management is focusing on hiring design engineers to enhance engineering capabilities, which is crucial for driving revenue [16] Question: Main programs in industrials - Key areas include test and measurement, oil and gas, and telecom, with recent growth driven by test and measurement revenues [17] Question: Spending in avionics for Q4 - Orders from major aircraft manufacturers are increasing, with a significant contract for commercial aircraft contributing to growth [18] Question: Strategies to combat tariffs - The company is examining material sourcing and working with customers to enact tariff relief clauses for defense products [19][20] Question: Update on Indiana Microelectronics Partnership - The partnership aims to integrate tunable products and scale production, with potential for large contracts in the future [26][28] Question: Update on Connectivity Partners - No investment has been made by the company yet, but Connectivity Partners is working on building a backlog of opportunities [30]