How are energy investors positioned?
M Tron Industries Inc. (MPTI) reported strong financial results for Q4 2024, significantly surpassing earnings expectations. The company posted an earnings per share (EPS) of $0.73, beating the forecast of $0.56. Revenue also exceeded expectations, reaching $12.81 million against a projected $12.6 million. According to InvestingPro data, the company maintains excellent financial health with an overall score of 3.7 (rated as "GREAT"), supported by strong profitability and growth metrics. Despite the positive earnings surprise, the stock declined by 4.67% to $39.59 in after-hours trading, reflecting investor concerns over broader market conditions.
Key Takeaways
- M Tron Industries’ Q4 EPS of $0.73 surpassed the forecast by 30%.
- Revenue for the quarter was $12.81 million, exceeding expectations.
- Stock price fell by 4.67% in after-hours trading, despite strong financial performance.
- The company is focusing on growth in the aerospace and defense sectors.
- Continued investment in R&D and automation is a priority.
Company Performance
M Tron Industries demonstrated robust performance in Q4 2024, with total revenues increasing by 18.9% year-over-year. The company’s trailing twelve-month revenue growth stands at 20.25%, according to InvestingPro data, which shows consistent growth momentum. The company has capitalized on its strong position in the aerospace and defense markets, which continue to provide growth opportunities. Their strategic focus on RF solutions has led to significant design wins in high-growth markets such as drones and electronic warfare. With a current market capitalization of $120.9 million and a PEG ratio of 0.4, the stock appears attractively valued relative to its growth prospects.
Financial Highlights
- Revenue: $12.81 million, up 18.9% year-over-year
- Earnings per share: $0.73, a substantial increase from $0.03 in the previous year
- Gross margins: 47.2%, improving by 360 basis points
- Adjusted EBITDA: $3.1 million, a 29.2% increase
Earnings vs. Forecast
M Tron Industries reported an EPS of $0.73, beating the forecast of $0.56 by approximately 30%. This positive surprise continues the company’s trend of outperforming market expectations, reflecting effective management and strategic execution.
Market Reaction
Despite the earnings beat, M Tron Industries’ stock dropped by 4.67% to $39.59 in after-hours trading. This decline comes as part of a broader market trend, with investors potentially reacting to macroeconomic concerns and profit-taking after recent highs. The stock remains well within its 52-week range, which spans from $23 to $71.10.
Outlook & Guidance
Looking ahead, M Tron Industries is targeting organic revenue growth of 9-10% and expects gross margins to remain between 45-49%. The company’s strong financial position, with a current ratio of 4.66 and minimal debt, provides substantial flexibility for future growth initiatives. The company is exploring mergers and acquisitions to complement its organic growth strategy and is optimistic about potential additional orders. Get deeper insights into MPTI’s growth potential and 8 additional exclusive ProTips with a subscription to InvestingPro, including comprehensive analysis and Fair Value estimates.
Executive Commentary
Cameron For, Interim CEO, highlighted the company’s strategic focus, stating, "Defense and aerospace has been an amazing market for the past several years and remains one with plenty of room for us to grow." He also emphasized the importance of acquisitions, saying, "We continue to look for complementary acquisition opportunities in the RF components and subsystem space."
Risks and Challenges
- Supply chain disruptions could impact production timelines.
- Market saturation in key sectors like aerospace may limit growth.
- Macroeconomic pressures and defense budget fluctuations pose risks.
- Tariff impacts and geopolitical tensions could affect international operations.
Q&A
During the earnings call, analysts inquired about the sustainability of gross margins and the company’s warrant dividend strategy. Executives addressed these concerns, highlighting their focus on maintaining strong margins through strategic investments in R&D and production automation.
Full transcript - M Tron Industries Inc (MPTI) Q4 2024:
John, Conference Operator: Thank you for standing by. My name is John, and I will be your conference operator today. At this time, I would like to welcome everyone to the Amtron Industries Incorporated Fourth Quarter Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.
Thank you. I would now like to turn the call over to Linda Biles, EVP of Finance. You may begin your conference.
Linda Biles, EVP of Finance, Chief Accounting Officer, Emtron PTI: Good morning, everyone. Thank you for joining our twenty twenty four Emtron CTI Q4 and fiscal year twenty twenty four earnings call. Please note that this call will be recorded and we will make the recording available on our website, www.emtronpti.com shortly after the call. Yesterday afternoon, we released our earnings release for the fourth quarter of twenty twenty four and annual fiscal year 2024. Before getting underway, we are required to advise you that the following discussions should be taken in conjunction with our most recent financial statements and notes as contained within our twenty twenty four ten ks, which was filed yesterday on 03/27/2025 with the FCC.
The discussion may contain forward looking statements with the meaning of 27A of the Securities Act of 1933 and Section 21E of the Securities 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 result expressed or implied by the company’s forward looking statements. The company undertakes no obligations to publicly update or revise any forward looking statement whether as a 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 interim CEO, Cameron For.
Cameron For, Interim CEO, Emtron PTI: Hey, good morning, everyone. And thank you, Linda. Thank you to our shareholders and interested parties for attending our fourth quarter and annual, fiscal year twenty twenty four earnings call and their interest in the company. We’re pleased to discuss our strong finish to the year and our outlook going forward. As a reminder to those who are new to the company or haven’t, tuned in recently, we Emtron PTI designed to manufacture highly engineered RF solutions, including electronic components and sub assemblies used to control the frequency and timing of signals in electronic circuits.
We’re a global company with three manufacturing sites in The United States and India. And the company’s primary markets include aerospace and defense, commercial avionics, industrials and space. So we’re pleased to report that the company continued to perform well with continued strength in MPI’s, sales and good financial performance for Q4 fiscal year ’twenty four. Our revenues continue to be driven by defense related orders. With improved operating performance, we have been able to continue to make strategic investments in research and development and have also initiated a number of efforts to increase the market profile of the company.
We also continue to make investments in our production facilities and have begun a program to explore greater automation on the floor to improve yields. Despite the daily news cycle and potential federal budget actions, we have seen no disruption to our business and expect to continue the company’s revenue expansion throughout the year. The continuing resolution passed and signed on 03/15/2025 extended government funding through the end of the fiscal year and largely preserved defense spending as it was, increasing the defense budget by $6,000,000,000 So not, not a great deal of change. Slightly costing or decreasing some defense programs and increasing spending in others. Overall, we believe that we are well positioned to continue to perform well with the anticipated changes in military procurement focus.
Yesterday, we reported the following Q4 FY twenty four results. The total revenues for the fourth quarter were $12,800,000 an 18.9% increase over the same period in the prior year. The revenue increased in the period primarily due to strong defense program, product and solution shipments. Gross margins for the fourth quarter of ’twenty four were 47.2, so a three sixty basis point improvement over the 43.6% gross margins of Q4 twenty twenty three. Gross margin improvement was driven by higher revenues, the results of prior investments in our manufacturing processes, resulting in greater efficiencies, and an improved product mix to higher margin products.
Net income per diluted share was $0.73 per share in the quarter, almost a 20x increase over the prior year’s $0.03 per share, which was deflated frankly by a non cash stock compensation expense related to a distribution of options to our employees to line their interests with that of shareholders. Adjusted EBITDA in the period was 3,100,000.0, an increase of 29.2% over the prior year’s fourth quarter EBITDA of 2,400,000.0. The increase was driven by gross margin improvements and continued containment of operating expenses other than the investment I discussed earlier in R and D. And that which resulted in a higher income for taxes, and a higher depreciation was offset by higher interest income as the company has accumulated more cash on the balance sheet. Backlog at the end of the quarter was $47,200,000 as compared to $47,800,000 for the year prior.
The slight decrease in the backlog from the prior year’s period reflects the continued strategy and focus on securing long, large long duration program centric business, which can materially impact backlog based on the timing and size of these orders. In January 2025, for example, we publicly announced one large order over $10,000,000 That was expected actually in FY 2024. For the fiscal year twenty twenty four, we reported the following results. Total revenues for the period were 49,000,000, 19.1% increase over fiscal year ’twenty three. The revenue increased primarily due to strong defense program products and solution shipments.
Gross margins for 2024, for the entire year were 46.2%, a five fifty basis point improvement over the 40.7% gross margin, we produced in 2023. And this, this margin improvement was driven by higher revenues, the result of the prior investments, in manufacturing processes that we discussed, and an improved product mix into higher margin products. Net income per diluted share was $2.65 per share for the year, a 107% increase over the prior years, $1.28 per share. The increase was driven by increased revenue offset by higher manufacturing costs, driven by the revenue increases, higher engineering expense related to the investment in R and D, and higher sales commission related to the increase of revenue, and an increase in overall increase at least in administrative and corporate expenses to support the growth in revenue. Adjusted EBITDA for the period was $11,100,000 for the year, an increase of 44% over the prior year’s $7,700,000 adjusted EBITDA number.
And the increase was driven by this improved gross, profit, continued containment of operating expenses, other than the investment in R and D. 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. Defense and aerospace has been an amazing market for the past several years and remains one with plenty of room for us to grow. We seek to maintain close relationships with our customers and be the first line resource for them as they plan upgrades to current systems or design new systems to meet government program needs and changing requirements. The same can be said for our avionics industrial businesses.
We are also pushing into new high growth markets and are accumulating design wins in space and satellite industry and seek to do more business in the drone and UAV markets, radar and electronic warfare, all areas that are expanding within the defense budget. These growing markets depend on the type of technologies that Imtron has been a leader for years. We have won a number of design wins in all these market areas with both well established, as well as up and coming vendors and expect our revenues to grow in these markets over time. While our management, team is focused on executing on our organic growth strategy, we are placing greater emphasis on complementing these efforts with inorganic growth from both partnerships and acquisitions. We continue to look for complementary acquisition opportunities in the RF components and subsystem space, as well as other subsystem or solution companies focused on the same end markets.
For companies that are too early in their development cycle to be an acquisition partner, we’ll look at forming strategic partnerships as a means of expanding our product portfolio and assist- assisting both companies in their growth. I’d like to thank our loyal employees for supporting the company and its mission and serving the nation and its capability
Anja Soderstrom, Research Analyst, Sidoti: to defend
Cameron For, Interim CEO, Emtron PTI: freedom. Intron places a critical plays a critical role in the defense of our nation, providing US sourced and highly engineered components for many US and allied military programs. Strengthening The US defense industrial base is more important than ever before. And we thank our employees for their dedication to their jobs, their fellow employees, and our mission. And I also want to thank our dedicated customers for their continued business and partnership.
Before I open the floor to questions, I wanted to introduce Bill Draffs and Linda Biles who are joining me on today’s call. Bill is our president and COO, having joined the company five years ago from FLIR and previously serving in senior management roles at Sautec and ICX. And Linda Biles, our EVP of finance and our chief accounting officer, has served, the company for over seventeen years. I also wanna thank, Anja Soderstone from Sidoti, who’s, our research analyst covering this space. She just published her research report on the company two days ago, which updated her numbers for the company.
So I wanted to point you to that. And last, make a last comment that there’s plenty of information on the company, including, numerous presentations we made over the past month, all available on our IR website on our, at www.imtronpti.com. And with that, operator, can you open the lines and allow some questions?
John, Conference Operator: Absolutely. Thank you. And we will now begin the question and answer session. The first question comes from the line of Anya Soderstrom with Sidoti. Please go ahead.
Anja Soderstrom, Research Analyst, Sidoti: Hi, and thank you for taking my question and congrats on the nice progress here and thank you for the shout out on behalf of me and the firm of Sidoti. If we just start talking about the tariffs maybe, if you’re affected from them and if so, how and if you’re able to pass on the expense on that?
Cameron For, Interim CEO, Emtron PTI: Yeah. Good question, Anja. And it’s one that’s on our minds. There’s a lot of, I guess noise in the news cycle. And I think, you know, we’re gonna have to see how it, it turns out.
We are continually kind of evaluating our supply chain, not only for tariffs, but there’s also a growing concern within the federal government about, where, you know, components are sourced for a number of the systems from all their vendors. We do receive some components or raw materials from Japan and, Korea and, and Asia. And, we’re watching that carefully and, making sure that we are prepared to react. But there hasn’t been any impact on our business to date. And we do plan ahead and make sure we have components on board for near term revenue.
Anja Soderstrom, Research Analyst, Sidoti: Okay. Thank you. And also in terms of the avionics market has been a little bit challenge for you, following the pandemic. How is that trending now and what are you seeing there?
Cameron For, Interim CEO, Emtron PTI: Yeah. Actually that’s I think going to be an area of strength going forward. So we were concerned at the end of the year about the Boeing strike and we’re happy that was resolved as quickly as it was. We serve really the suppliers, the main suppliers to both Airbus and Boeing, and we have components on every airframe that they produce. We’re also involved with some of the business jet companies.
So we’re convinced that that market’s going to have an upturn by the end of the year, and we’re starting to see more activity as those production lines come back online and they kind of work through whatever inventories they might have had.
Anja Soderstrom, Research Analyst, Sidoti: Okay. Thank you. And then let’s touch on the backlog. It was a little bit softer than you had mentioned, but you mentioned that $10,000,000 contract coming in, in January and it was anticipated in the previous year. And Sison, you actually received two contracts of the magnitude of $10,000,000 but what does the pipeline look like for you in terms of other large contracts to the same sort of size?
Cameron For, Interim CEO, Emtron PTI: Yeah. Good question. We were hoping that one $10,000,000 order would come in by the end of ’twenty four. It didn’t, but it came in a few weeks later. And we frankly don’t have a lot of control over some of the procurement processes that are taking place.
As our orders get larger, you know, they come under more compliance scrutiny, which it it hasn’t impacted any orders and we we’ve done very, very well in the compliance cycle. But it does talk and delay things, a couple weeks. So, we have a number of orders coming in throughout Q1 and also expected in Q2, which are sizable. And so I think our pipeline looks good for the year. And we will be publishing or making a press release on some of the larger ones as they come in over the next quarter or so.
Anja Soderstrom, Research Analyst, Sidoti: Okay. Thank you. And you also issued that warrant dividend recently. Can you just talk about the motivation for that?
Cameron For, Interim CEO, Emtron PTI: Sure. Yeah. So we’ve had tremendous performance in the company stocks since ours have been out in 2022. And we did want to, you know, we have a policy of really not making cash dividends. But we did want to reward our shareholders and those people who are investing in the company and believe in our story.
So we wanted to issue, dividend to them. The, you know, we absolutely apologize for the switch from a rights offering to a dividend warrant, but we think the dividend warrant is a better instrument for providing value to our shareholders. It has not been issued yet, but the record date has been set. And it will provide a means of shareholders either participating in the growth of the company by exercising their warrant at some point and investing, and receiving additional shares in the company. Or they could, that we anticipate it’ll be tradable, we’ve applied to trade it on the New York Stock Exchange.
And if that happens, that will allow them also to if they don’t want to exercise, they could trade that warrant and receive some remuneration for the sale of the warrant.
Anja Soderstrom, Research Analyst, Sidoti: Okay. Thank you. And you’ve had a pretty strong growth over the last couple of years in terms of revenue. What can we expect for 2025? And will you provide any sort of guidance for 2025?
Cameron For, Interim CEO, Emtron PTI: Yep. No, I appreciate that question, Nania. It’s obviously early in the year. I think that your research report that you published a few days ago is, is really a very good look at the company, and its potential. And, you know, I think those are very reasonable estimates.
You know, going into the year, we will provide some guidance later on as we get further down the track. But I think at this point in time, it’s probably prudent to, withhold that. But we think, you know, long term, we’re a company that can grow very, very consistently at 10% revenue. In the past several years, we’ve kind of gone into each quarter or each fiscal year thinking that, and we’ve been able to exceed it. I think it’s just too early this year to tell if we’ll be in the same position this year or not.
But we do expect continued strong performance in the company. And, I think your estimates are very reasonable.
Anja Soderstrom, Research Analyst, Sidoti: And that sort of double digit growth, that’s on an organic basis, right? And then you’re looking at M and A opportunities on top of that too. Yeah, I think further back to
Cameron For, Interim CEO, Emtron PTI: double digit growth. And I also do think that there’s the potential for additional orders. We just, but right now, we feel more comfortable with, you know, kind of point people towards 9%, ten % growth for the year.
Anja Soderstrom, Research Analyst, Sidoti: Yeah. Okay. Thank you. That was all for me.
Cameron For, Interim CEO, Emtron PTI: Thank
John, Conference Operator: you. And the next question comes from the line of Chip Ruhe with Ruhe Asset Management. Please go ahead.
Chip Ruhe, Asset Manager, Ruhe Asset Management: Good morning, guys. Good quarter. I wanted to touch on the gross margin strength. As you noted, very strong in the quarter and strong for the year. But what do you how much of that and you listed out three things, I guess, revenue, manufacturing efficiencies and mix.
How much of that 47.2% or the increase do you think is kind of sustainable as we roll into 2025%? And how much is mix dependent or other variables around the gross margin?
Cameron For, Interim CEO, Emtron PTI: Yeah. I don’t think we’ve done an analysis necessarily of it. But I think we’ve made a number of improvements over the past several years on, just fixing bottlenecks and brewing processes on the manufacturing floor. So I think that that part is very, very sustainable. We have had, you know, as we’ve recompeted for contracts, price improvements or increases, that have been maintained with our customers.
And they’ve done, you know, a lot of analysis on our cost structure just to justify it. We feel comfortable with that. And then thirdly, we’ve made a shift in markets, you know, to more, more program business where there’s a lot of, of engineering that goes into every product. So we’re we’re selling less products, frankly, that are, maybe considered commodity. So these are very specialized products, and so that that points towards a higher margin.
And I don’t know if you have any more commentary on that, but we have pointed people to thinking that we should remain in the high 40s, so 45% to 48%, forty nine % in that range. And it’ll change by quarter.
Bill Draffs, President and COO, Emtron PTI: Yes. You covered the high points, Cameron. I can’t stress enough how much our process engineering team engages with the operators to make sure that they have all the fixturing, all the ergonomics, all the automation they need to be efficient. And we’re just constantly measuring how many units per hour. And then every time we do an improvement, we celebrate that.
And so just really focus on efficiencies.
Chip Ruhe, Asset Manager, Ruhe Asset Management: And if I could follow-up, first quarter twenty twenty two and first quarter twenty twenty three both saw kind of a dip in gross margin. Is that some seasonality of your business we should expect the same thing? And I guess what I’m looking at, the third quarter and the fourth quarter had very strong gross margins. And you noted the Sidoti report is reasonable and they’re looking kind of for a dip in those margins even into the second half of twenty twenty five. And that just doesn’t seem like given the cadence of the business and the wins and the cost reductions and the things you’re talking about, I don’t what am I missing?
Why would that happen? Why would that be reasonable?
Cameron For, Interim CEO, Emtron PTI: Reasonable? Yes. Actually, if you look at the prior couple of years, usually, Q1 is slightly, it’s either flat from Q4 or in the earlier periods like ’21, ’20 ’2 is slightly down. I actually don’t think we’ll necessarily see that activity. I think we don’t have a lot of seasonality in our business.
It’s really more a matter of product mix and timing.
Chip Ruhe, Asset Manager, Ruhe Asset Management: And what about the second half of the year, like next year that reasonable comment? Would there be anything one off that would depress margins? Or are you just kind of being conservative?
Cameron For, Interim CEO, Emtron PTI: No. I mean, I am looking at a report and I see the margin staying relatively flat, like slightly increasing throughout the year. And I think that’s kind of a reasonable trend. I think that I think that the facility report talks about 46.5 going to 47% for the year. And I think that’s in a range of definitely reasonable.
Chip Ruhe, Asset Manager, Ruhe Asset Management: Okay. Thank you. And then on the drone and electronic warfare, you said you had some wins already. Can you detail that? Is it sizable?
And will we see a revenue impact on that over the next twelve months?
Cameron For, Interim CEO, Emtron PTI: Yeah. We’ve had an, we’ve actually been involved in the drone business since 2014. We tend to play in areas in the in the larger drones, not not in FPV drones, for example. So, if you look at Global Hawk and some of the larger platforms, you know, those are the kinds of areas we’ve played historically in. We’re also working with a number of the newer vendors who are, you know, participating like Replicator two and other programs in the Defense Department, and we expect, a fair amount of growth out of those areas.
So I think it is an area that’s going to increase. And same with space. So in space, and satellites, we we participate there in ground stations as well as spacecraft and and higher orbit satellites. You know, we’re not in the OEM market, for example. And that’s usually because of costs and the more stringent requirements.
Chip Ruhe, Asset Manager, Ruhe Asset Management: Okay. And last one, if I could, just capital allocation. I mean, the net cash is nice to see. But at this point almost $4 a share plus or minus. How quickly do you think that can be deployed into acquisitions or potential repurchase?
And is that year end number a good number to use? Or is there any kind of payable variability that you would say, hey, just be careful the way the balance sheet ended at the end of the year, the real number is more likely this?
Cameron For, Interim CEO, Emtron PTI: Yes. I think it’s very dependent on whether we do an acquisition or not or a repurchase. But, I think we’ll probably be able to get to a slightly higher cash number by the end of the year. But we’ll see about that, like, unless we do make an acquisition. And if we do make an acquisition, we would like to use a sizable amount of cash and might also finance it through a little bit of debt just to help reduce any issuance of shares.
Chip Ruhe, Asset Manager, Ruhe Asset Management: Are you repurchasing shares now or is there any outlook for that?
Cameron For, Interim CEO, Emtron PTI: We are not doing that right now, but it is something we’ve discussed.
Chip Ruhe, Asset Manager, Ruhe Asset Management: Okay. Thank you, guys.
Cameron For, Interim CEO, Emtron PTI: Yes. Appreciate it.
John, Conference Operator: No further questions. That concludes the Q and A session. And I would like to turn the call back over to Cameron for closing remarks.
Cameron For, Interim CEO, Emtron PTI: Okay. Well, thank you, John. I’d like to thank everybody for participating in today’s call and your interest in the company. Have a great day. Please feel free to contact us if you have further questions at irimtronpti dot com.
And, and we do have a lot of materials on the website that should hopefully answer, many questions you have, but happy to interact. So thank you again for your time.
John, Conference Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.
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