M-tron Industries, Inc. (MPTI) Earnings Call Transcript
November 12, 2026
Earnings Call Speaker Segments
Hello, everyone. Thank you for joining us, and welcome to the M-tron Earnings Call for Q3 2026. [Operator Instructions] I will now hand the conference call over to Linda Biles VP of Finance. Linda, please go ahead.
Good afternoon, everyone. Thank you for joining our 2026 Emtron Q3 earnings call. Please note that this call will be recorded, and we will make the recording available on our Investor Relations website, ir.emtron.com shortly after the call. This morning, we released our earnings for the third fiscal quarter of 2026. Before getting underway, we are required to advise you that the following discussion should be taken in conjunction with our most recent financial statements and notes is contained within our 2025 10-K, which was filed on March 26, 2026, with the SEC. This discussion may contain forward-looking statements within the meaning of 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements contain known and unknown risks and uncertainties, which are detailed in our filings with the SEC. Although the company believes that the forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there are no assurances that the company's actual results will not differ materially from any results expressed or implied by the company's forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether as the result of new information, future events or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. With that, I will now turn the call over to our CEO, Cameron Pforr.
Okay. Well, thank you, Linda, and good afternoon, everyone. Thank you for attending our third quarter earnings call and your interest in Imtron. We got a little unusual earnings release and call scheduled today just due to the veterans holiday. So I appreciate all of your flexibility. We are very pleased to discuss our strong results for the first 9 months of the 2026 fiscal year. As a reminder, Intron designs and manufacturers highly engineered RF solutions, including electronic components and subassemblies used to control the frequency and timing of signals in electronic circuits. We're a global company with 3 manufacturing sites, 2 of them in the United States and 1 in India. The company's primary markets include the defense and aerospace markets, commercial avionics, industrials and space. So we're pleased to report that the company continues to perform well with continued strength in our 2026 Q3 sales and backlog. Our revenues continue to be driven by defense-related orders However, we saw growth this quarter in other areas as well. With consistent operating performance, we've been able to continue to make strategic investments in research and development and our manufacturing capabilities and capacity. Continue to improve the market profile of the company and prime the pump for future growth. This morning, we reported the following Q3 fiscal year 2016 results. Total revenues for the third quarter were $15.7 million, an 11.1% increase over the $14.2 million of revenue we reported in the third quarter of '25. The increase was primarily due to strong growth in aerospace and defense, avionics and space shipments. Gross margin was 44.5% for the third quarter of '26 compared to 44.3% for the 3 months ended September 30, 2025. The slight increase was primarily due to product mix. Our gross profit in the period grew to $7 million, an 11.5% increase over the prior year's Q3 performance of $6.28 million. Net income was $3 million or $0.70 per diluted share for the 3 months ended September 30, 2026 compared with $1.8 million or $0.60 per diluted share for the 3 months ended September 30, 2025. The increase was primarily due to the increase in revenue and the associated gross profit discussed above and the higher interest income earned on investments and money market mutual funds, driven by higher balance cash balances invested. Adjusted EBITDA was $3.6 million for the 3 months ended September 30, 2026 as compared to $3.2 million for the 3 months ended September 30, 2020. The slight increase was primarily due to higher revenues and gross profit, partially offset by higher general and administrative expenses. We continue to execute on our strategy of continually moving into more program business. which now makes up the vast majority of our aerospace and defense revenue. The key growth areas in that sector for us this year has been radar and electronic warfare systems, with both areas growing at well over 100%. We are also a case supplier to numerous precision guidimmunition programs, including many of the programs that were included in the 7-year framework agreements signed with between the Department of Award and Raytheon and Lockheed Martin in the early spring in 2026. Despite the FY '27 federal defense budget not being signed, we have seen contract awards totaling more than $127 billion with Raytheon and Lockheed in multiyear contracts for several missile systems, including PAC-3, Tomahawk, SM-3 IB interceptors, Standard Missile 6 and MRAM. The majority of these contracts have been 5-year production agreements with substantial increases in production volume. With this prioritization of missile replenishment we expect to see significant increases in order quantities for 2028 and beyond for the programs that we support. We continue to innovate, as evidenced by the high rate of revenue from newly designed products. Other controlled oscillators are growing quite strongly, find demand for new radar systems from traditional vendors and up and comers alike. We are also seeing strong interest for these products from our electronic warfare systems customers. There are many counter-UAS projects currently underway and we are also competing for slots in a number of large radar programs. And many of you have seen the recent Boeing announcement about their 5% reduction in force in order to realign the size of their workforce with the current ramp of airframe deliveries. We are not alarmed by this as some near-term deliveries are being pushed further out and their near-term CapEx for that division is greater than the anticipated free cash flows. We don't believe that this will impact our '26 results or 2027 growth as both Boeing and Airbus order through their subcontractors, and orders were expected to be slower in 2027. They are currently working through a prior 3-year order. Backlog remained strong through the quarter with a book-to-bill ratio slightly above 1. As we have said in the past, our bookings are very lumpy and timing is subject to a lot of factors, including the current political environment in Washington. We anticipate several large aerospace and defense orders originally anticipated for Q3 or Q4 of 2026, which we now believe will take place early in the new year, which means that our backlog will likely decrease some in Q4 and then strengthen quite a bit in Q1 2027. We continue to look at acquisition and strategic investment opportunities and execute on our three-pronged inorganic growth strategy, which includes M-tron as a holding company, M-tron serving as a vehicle for larger corporate carve-outs or reverse mergers and Mtron as an investment platform. We're currently executing on a transaction that would fit into the first category and have made corporate development hire to help accelerate the breadth of our efforts. I'd like to thank our loyal employees for supporting the company and its mission of serving the nation and our dedicated customers for their continued business and partnership. Mtron plays a critical role in the event our nation by providing U.S. sourced highly engineered components for any U.S. and allied military programs. Having a U.S.-based advanced manufacturing capability remains important, and we are looking to expand that capacity to support our national interest. Before I open the floor to questions, I want to mention that we will be holding one-on-one meetings at the Raymond James Investor Symposium next week in California and presenting at the Sidoti year-end Virtual Investor Conference later in December. In early 2027, we are currently scheduled to present at the Oppenheimer Emerging Growth Virtual Conference in February and the TD Callon Aerospace and Defense Conference, also in February '27. Information on these events will be posted on our investor website, and I encourage you to attend and engage with us as you have time. With that, operator, can you open the lines and allow the first question?
[Operator Instructions] Your first question comes from the line of Ana Strom with Sidoti.
Congrats on the right progress here. So just like you expect a lot of back log growth in 2027 and that benefited 2028 revenue. So should we expect revenue then to accelerate in terms of growth in 2020 over 2027?
Yes. Good question, Ana. So we're -- we have a lot of demand for our products right now. As a matter of fact, if you look at our backlog, we have more backlog than we can produce in the quarter. And we expect that to continue to be the case next year. So we're rapidly looking to expand, and we have a very active hiring program, for example, underway as well as a lot of CapEx activity taking place to support the growth. If you look at our progress this year. This quarter, we grew 11% year-on-year. But year-to-date, I think we're at 13% of the prior year-to-date period. So -- and I expect us to end the year somewhere around that growth rate and that should accelerate some '27 and then I think that based on the inputs that we have currently that '28 will be at a number above that, probably in the high teens.
Okay. And then the gross margin was quite high due to product mix. How should we think about that in the coming quarters?
Right. So earlier in the year, we had some headwinds with some of the products that we were producing that we're relatively new and we're trying to scale. So we've made good progress on improving the efficiency there. So that's been a real help. But a lot of this is driven by product mix quarter-to-quarter. This past quarter, we had a lot of business that was fairly high margin. I think next year, we're looking forward at a margin -- gross margin in the 43% to kind of 46% range. And next year, I anticipate that we'll get a building year in terms of -- if we do have a lot of orders earlier in the year, we'll have to scale our production capabilities to meet that demand. which will require some investments in hiring. So I imagine our gross margin will be down a little bit, but that will be really an investment in future growth that we'll have contracts already on hand for. So I feel very strong about the gross margin going forward, being able to maintain or increase this rate slightly.
There are no further questions at this time. Anya, if would like to raise your hand, you may ask another question. Your line is open Anya, please go ahead.
Can you also just elaborate on this expense programs that you are talking about maybe coming in 2027? And what you expect like in terms of the discount budget?
Yes. I just want to make sure I understood the question. Was it about the current programs or the ones we anticipate closing earlier in the year?
The 1 that you are bidding on?
Yes. Okay. So yes, I mean, obviously, the defense budget is definitely in the state of flux right now. And the administration has and divide it into 3 components, using different mechanisms to get the various pieces approved. We have though seen some of these framework agreements, which were designed to give the industry years visibility into future orders now be contracted. So especially in September, I think over $100 billion of missile contracts were awarded and the vast majority of them were 5-year contracts. So they have very specific growth rates and requirements in those contracts. We have been engaged with a number of people in the industry, both the leader -- traditional leaders as well as some of the newer vendors providing slightly less expensive programs than the exquisite missiles that I highlighted earlier. And it's -- and we do -- we've been bidding on those and providing the feedback that they requested. And we do anticipate winning our fair share of those engagements. And we think we'll see those POs early in the coming year, so after the new Congress is seated. And then I do anticipate that those will be multiyear contracts. I mean it's -- they are still in the state of flux. So we'll find out at the beginning of the year exactly how they look. But I do anticipate that our backlog will go significantly at that point in time and that we'll also finally have a lot more visibility into the growth rate that this will drive for the company. But I do think we're at an inflection point, and it's kind of well recognized that this replenishment cycle needs to go forward no matter who's managing Congress or is in the White House.
And is that mostly U.S. driven? Or do you see a demand also from Europe or NATO?
No, it's primarily U.S. driven, but some of the current sales that we do are sanctioned and the foreign military sales and do go overseas.
Okay. And then you mentioned you hired a corporate development to the team there. What -- can you tell us more about what you're looking for and how imminent like are you -- are you close to something or?
Yes. No, thank you for asking. So yes, we've been looking for quite a while, but we also all have good jobs. So we've been -- we do have 1 deal that we're trying to get announced before the end of the year, which would be really wide up our alley in terms of the products and the markets it serves and would be well understood in terms of how it's manufactured. So it's an RF product. And -- but we are looking further add additional RF companies that are maybe a little bit larger and we're a little further afield than what we currently do. So we'll take a little bit more analysis. And then we also are pretty regularly engaged with larger companies looking at the corporate spinouts. So some of those that are in the market now are in the RF area, and some of them are more systems-oriented. And we'd like to take a look at all of those. So we do think that we have a very strong platform to expand the business both in the RF space as well as additional kind of A&D types of acquisitions.
Okay. And then in terms of CapEx, it was a bit elevated this year due to investment in the growth and expansion. But how should we think about that for the coming year?
Right. So yes, this year, you're right, it was elevated. It was over $4 million. So it's probably roughly 7% to 8% of revenue, which is about double of what we've been doing over the past couple of years, and that was directly in relation to actual demand we had to produce products. So we had to set up some new production lines. And I think the coming year, I think we'll still be also a strong year of CapEx growth. What we're trying to understand the really is that based on some of these potential missile contracts whether we'll need to set up a new facility at some point in time and just it's so far out. So that could radically change our thinking. But right now, we're currently intending to expand the capacity in our plant in Orlando, and that is well underway.
Is an opportunity if you take an actual footprint in Orlando would you need to add a new facility?
I think right now for the next year or so, we're fine in Orlando. But if some of these purchase orders come in at the growth rate that has been discussed at least in the press, that could lead to us having to create a new facility either land or somewhere else in the country, just kind of meet the demand in years like '29, '30.
There are no further questions at this time. I will now turn the call back to Cameron for closing remarks.
I'd like to thank everybody for participating in today's call and your interest in John. Have a great day, and please don't hesitate to reach out to iratmtron.com, should you have additional questions, we like to actively engage with our investors and encourage your inputs and your questions. Thanks again.
This concludes today's call. Thank you for attending. You may now disconnect.
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