Earnings call transcript: M Tron Industries misses Q1 2025 EPS forecast

M Tron Industries Inc. (MPTI) reported its Q1 2025 earnings, revealing a shortfall in both earnings per share (EPS) and revenue compared to analyst expectations. The company posted an EPS of $0.56, falling short of the forecasted $0.66. Revenue came in at $12.7 million, below the anticipated $13 million. Following the earnings announcement, M Tron Industries’ stock dropped by 14% in after-hours trading, closing at $51.29 from a previous close of $59.64. According to InvestingPro data, despite the recent drop, the stock has delivered an impressive 110% return over the past year.

Key Takeaways

• M Tron Industries missed both EPS and revenue forecasts for Q1 2025.
• The company’s stock fell 14% in after-hours trading.
• Despite revenue growth, gross margins slightly decreased compared to last year.
• Strong backlog growth of 18.9% suggests potential future revenue.
• The company is investing in automation and new product lines.

Company Performance

M Tron Industries reported a 13.8% year-over-year increase in total revenues for Q1 2025, reaching $12.7 million. Despite this growth, the company’s gross margins decreased slightly by 20 basis points to 42.5%. Net income for the quarter was $1.6 million, translating to $0.56 per diluted share. InvestingPro analysis shows the company maintains an EXCELLENT financial health score of 3.79, with particularly strong metrics in growth and profitability. The company’s trailing twelve-month gross margin stands at 46.19%, suggesting potential for margin improvement.

Financial Highlights

• Revenue: $12.7 million, up 13.8% YoY
• Earnings per share: $0.56, missed forecast by $0.10
• Gross Margins: 42.5%, down 20 basis points from Q1 2024
• Net Income: $1.6 million
• Adjusted EBITDA: $2.5 million

Earnings vs. Forecast

M Tron Industries reported an EPS of $0.56, missing the forecast of $0.66 by 15.2%. Revenue also fell short, coming in at $12.7 million against the expected $13 million. This represents a revenue miss of approximately 2.3%. The shortfall in earnings and revenue marks a deviation from the company’s previous performance trends.

Market Reaction

Following the earnings release, M Tron Industries’ stock saw a significant decline of 14% in after-hours trading. The stock’s latest price was $51.29, down from the previous close of $59.64. This movement places the stock closer to its 52-week low of $28, reflecting investor concerns over the earnings miss. Based on InvestingPro’s Fair Value analysis, the stock appears overvalued at current levels. However, the company maintains exceptional financial strength with a current ratio of 5.7 and virtually no debt, providing a solid foundation for potential recovery. Discover more insights and 10+ additional ProTips about MPTI with an InvestingPro subscription.

Outlook & Guidance

Looking ahead, M Tron Industries maintains a positive outlook with expectations of continued revenue growth throughout the year. The company anticipates improved gross margins in subsequent quarters as new product lines mature. The backlog, which increased by 18.9% to $55.5 million, suggests strong future demand. InvestingPro data reveals the company’s strong return on invested capital of 28% and revenue growth of 19.05% over the last twelve months, supporting management’s optimistic outlook. Get access to MPTI’s comprehensive Pro Research Report, part of our coverage of 1,400+ US stocks, for detailed analysis and actionable insights.

Executive Commentary

Interim CEO Cameron Forr emphasized the company’s strategic focus: "Imtron plays a critical role in defense of our nation by providing U.S.-sourced, highly engineered components." He also noted the importance of the electromagnetic spectrum in defense, stating, "The importance of filters and oscillators has only increased as the electromagnetic spectrum has become a more contested part of the battle space."

Risks and Challenges

• Supply Chain Issues: New federal tariffs on imported materials could impact costs.
• Market Saturation: Increased competition in the defense and aerospace sectors.
• Macroeconomic Pressures: Global economic uncertainty may affect defense budgets.
• Product Launch Delays: Potential delays in new product lines could impact revenue.
• Margin Pressure: Continued challenges in maintaining or improving gross margins.

Q&A

During the earnings call, analysts questioned the company’s ability to pass tariff costs to customers, to which management confirmed potential strategies. There was also a focus on gross margin challenges with new product introductions and expectations for margin improvements as these products mature.

Full transcript - M Tron Industries Inc (MPTI) Q1 2025:

Eric, Conference Operator: Thank you for standing by. My name is Eric, and I will be your conference operator today. At this time, I would like to welcome everyone to the Emtron Earnings Call for Q1 twenty twenty five. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

Answer I would now like to turn the call over to Linda Biles, M Tron’s EVP of Finance. Please go ahead.

Linda Biles, EVP of Finance, Emtron: Good morning, everyone. Thank you for joining our twenty twenty five Emtron Q1 earnings call. Please note that this call will be recorded, and we will make the recording available on our website, www.emtron.com, shortly after the call. Yesterday afternoon, we released our earnings for the first fiscal quarter of twenty twenty five. 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 as contained within our twenty twenty four ten ks, which was filed on 03/27/2025 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 SEC filings. 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 obligation 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 Forr.

Cameron Forr, Interim CEO, Emtron: Yes. Good morning, everyone, and thank you, Linda. First of all, I want to thank all of our shareholders and interested parties for attending our first quarter FY ’twenty five earnings call and your interest in the company. We’re pleased to discuss our strong start to the fiscal twenty twenty five fiscal year and our outlook going forward. As a reminder, Imtron designs and manufactures highly engineered RF solutions, including electronic components and subassemblies used to control the frequency and timing of signals and electronic circuits.

We’re a global company with three manufacturing sites in The United States and India. The company’s primary markets include defense and aerospace, commercial avionics, industrials and space. We are pleased to report that the company continued to perform well with continued strength in Imtron sales and good financial performance for Q1 fiscal year twenty twenty five. Our revenues continue to be driven by defense related orders, and we also saw some growth in the commercial avionics market, something we believe bodes well for the future recovery of that market. We are pleased to see Boeing resolve its labor dispute early in the year and expect orders from the major airframe manufacturers to pick up throughout the year.

With consistent operating performance, we have been able to continue to make strategic investments in research and development and continue to increase the market profile of the company. Part of that effort was the recent rebranding of the company as Imtron, updates to our logo, our website, sales materials, as well as the initiation of advertising in some of the leading publications for our sector and also enhanced lead generation activity. We also continue to make investments in our production facilities. And we’ve seen good initial results in a program that I mentioned, I think, on the last call to deploy greater automation on the factory floor to improve yields. It looks like we have gotten through some of the choppiness in the defense market caused by some of the conflicting messaging from the administration on the defense budget.

We at Imtron have seen no disruption to our business and expect to continue the company’s revenue growth throughout the year. The continuing resolution passed and signed in mid March twenty twenty five extended government funding through the end of the federal fiscal year and largely preserved the defense spending as it was, actually increasing the defense budget by, I guess, a relatively small amount, 6,000,000,000. The administration is now proposing increasing the defense budget, for this fiscal year by 150,000,000,000 through a reconciliation process and also substantially increasing procurement spending in the federal FY 2026 budget. Many of the areas targeted for investment, such as next gen aircraft, shipbuilding, loitering, and precision guided munitions, border security, and the Golden Dome antiaircraft, anti missile defense, all require a significant amount of RF subsystems and components, highlighting the continued growing need for Imtran’s products. The importance of filters and oscillators has only increased as the electromagnetic spectrum has become a more contested part of the battle space.

And communications between systems and commanders and combatants remain subject to electronic countermeasures, such as jamming and interference. We believe that we are well positioned to continue to perform well with the anticipated changes in military procurement focus. Now, Linda, would you mind giving our audience the highlights of our fiscal year, q one performance?

Linda Biles, EVP of Finance, Emtron: Yes. Total revenues for first quarter were 12,700,000.0, a 13.8% increase over the $11,200,000 of revenue in the same period last year. The revenue increased in the period primarily due to strong defense program product and solution shipments. Gross margins for the first quarter of twenty twenty five were 42.5%, a 20 basis point decrease over the 42.7% gross margins in Q1 of twenty twenty four. The decrease is primarily due to additional manufacturing costs with the initial production runs of several new products.

In addition, we saw the initial impact this quarter of duly initiated federal tariffs on imports of foreign sourced materials and partially finished goods. Net income was $1,600,000 or $0.56 per diluted share in the first quarter of twenty twenty five compared with $1,500,000 or $0.53 per diluted share in the first quarter of twenty twenty four. The increase in revenues discussed above was partially offset by higher manufacturing cost of sales consistent with the growth in revenues and the introduction of new products as well as higher engineering, selling and administrative expenses related to continued research and development investments, higher sales commissions from an increase in revenues and an increase in administrative expenses consistent with the overall growth of the business. Adjusted EBITDA was $2,500,000 in the first quarter of twenty twenty five compared with $2,300,000 in the first quarter of twenty twenty four. The increase was primarily due to higher revenues resulting in higher income.

Backlog was $55,500,000 as of 03/31/2025 compared to $47,200,000 as of 12/31/2024, and $46,100,000 as of 03/31/2024. The increase in backlog reflects several large defense and avionics orders received during the quarter and the continued broad demand for our products. In early February twenty twenty five, for example, we publicly announced one large order supporting shipboard systems for over $10,000,000 that was expected to have been received in fiscal year twenty twenty four. I’d now like to turn the call back over to Cameron.

Cameron Forr, Interim CEO, Emtron: Yeah. Thank you, Linda. So in March 2025, Amtron saw the initial impact of the recently announced federal tariffs on the import of goods and materials from outside The United States. And while Imtron is a United States based manufacturer with a great degree of vertical integration, something we pride ourselves on, We do import some materials from Japan, China, South Korea, and a very small amount from Europe. And we also perform some finishing work at our facility in Nudia, India.

It’s difficult to predict the long term impact of this trade policy on our financial performance as it changes regularly. We are working with many of our defense customers on acting parts of the federal acquisition regulations, which potentially exempt materials received for defense production from entry tariffs. In addition, we continue, as always, to analyze our supply chain in order to make sure that we have redundancy of suppliers where possible and can source from reliable suppliers at the best prices possible. To date, we have seen no impact from tariffs on demand for our products. Also, wanted to highlight the recent distribution of warrants.

On 04/25/2025, the company distributed the dividend of warrants to stockholders of record as of 03/10/2025. The warrants are listed on the New York Stock NYSE American Exchange under the ticker MPTIWS. The warrants may be listed on certain financial websites under the ticker MPTIWT or a similar nomenclature. Pursuant to the warrant agreement, the warrants contain the following terms, which I’ll summarize. And we’re happy to answer questions about this later.

But five warrants are exercisable to purchase one share of common stock. The exercise price is $47.5 per share. The warrants are exercisable at the earlier of thirty days prior to the maturity date of 04/25/2028, and or on the date when the average volume weighted average price or the VWAP of Imtron’s common stock is greater than or equal to $52 per share for the prior thirty consecutive trading days. We call this the accelerated trigger or early trigger. The warrants expire at the earlier of 04/25/2028, but they run to full maturity for thirty calendar days following Imtron’s public announcement of the date of the accelerated trigger being triggered.

And warrant holders exercising their full allotment of warrants can apply to subscribe for any and all shares of common stock issuable pursuant to any outstanding but unexercised warrant. This is called the oversubscription feature, and it’s included on your warrant agreement. Further information on the warrants is available in a fact found on our Imtron investor website, which is ir.imtron.com. Just to highlight some of the strategic activity, we do 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 revenues. We are involved, for example, in over 40 programs of record, a very significant amount.

Defense and aerospace has been an amazing market over the past several years, and it does remain 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 compete for the design of new systems to meet government program needs. And the same can be said in our other sectors like avionics and industrials. We have also ramped up our pursuit of complementary acquisitions and strategic partnership opportunities in both the RF component and subsystem space as well as some tangential subsystem and solution companies that focus on the same markets. We are focused on finding deals that would be accretive for shareholders and help both companies strengthen their financial performance and customer base.

Strengthening The US defense industrial base is one of the goals of the administration’s trade policy and current budget focus. They’ve actually dedicated budget dollars to the strengthening of the defense industrial base and the anticipated increase in this year’s defense budget. Having a U. S.-based advanced manufacturing capability to support our joint forces is more important than ever before, and we thank our employees for their dedication to their jobs and the mission. We also thank our dedicated customers for their continued business and the trust they place in Imtron and our people.

Imtron plays a critical role in defense of our nation by providing U. S.-sourced, highly engineered components for many U. S.-and allied military programs. Before I open the floor to questions, I wanted to mention that we will be holding our annual meeting on 06/10/2025, at ten a. M.

In the morning at the Harvard Club in New York City. The meeting will be open to all shareholders of the company’s common stock. In addition, we will hold an investor presentation and question and answer session before the annual meeting. And information for both of these events will be posted on our investor website. For those interested in attending in person, you’ll need to get a QR code from our IR site to pass through the Harvard Club security.

Operator, can you please open the lines and allow the first question?

Eric, Conference Operator: Your first question comes from the line of Anna Soderstrom with Sidoti. Please go ahead.

Anna Soderstrom, Analyst, Sidoti: Hi, thank you for taking my questions. So in terms of the gross margins, since that was a bit muted due to the ramping of new programs, How how do how is that gonna sort of develop? And and with those new large contract wins, are are we gonna see that being a ramp for a longer period of time, or will it pick up pretty quickly?

Cameron Forr, Interim CEO, Emtron: Yeah. Good question, Anya, and thank you for joining. The gross margins were impacted by, really three factors. One one was just product mix. We had less, products being shipped for two of our long term missile programs, which have very, you know, relatively high margins.

And that is expected to return very shortly. Or those those that part of the mix was gonna increase in q two throughout the rest of the year due to some of the orders we received in q one. The thing I mentioned earlier was that we did ship some new products. And whenever you’re working on new products, the first couple runs are a little bit less efficient than when all the kinks have been worked out in the process, and you’re running at a higher yield. So we shipped some new space products, which require rigorous testing.

And they’ve been successful, but, you know, it the first couple of runs of those, take more labor than you would hope to do use later. And also, we shipped a new type of oscillator in the border that’s used in EW and radar, which I think is great for the long term prospects of the company. And I think that those yields will improve over time. So I do expect the yields to improve and the margins to improve throughout the year. We also did see some impact to the tariffs.

We had a little bit less than $100,000 of tariff charges in March. And it’s kind of difficult to predict how much we should anticipate receiving there for the rest of the year. And we hope that a lot of the progress that’s been made over the past couple of weeks reducing the tariffs will have a positive impact there. So I do anticipate this to go up in the rest of the year.

Anna Soderstrom, Analyst, Sidoti: Okay. That’s for for those new programs that you you do shipped in the space and the oscillators, are they higher than the average

Cameron Forr, Interim CEO, Emtron: margins? Yeah. They’ll be you

Anna Soderstrom, Analyst, Sidoti: ramp them.

Cameron Forr, Interim CEO, Emtron: They’ll be yeah. They’ll be very strong margin products, but they’re just early to develop. Okay.

Anna Soderstrom, Analyst, Sidoti: And then in terms of the tariffs, you’re not able to pass that on at all?

Cameron Forr, Interim CEO, Emtron: Right. Yeah. We we do have the capability on our contracts to pass that on. The reality is that in the market, there’s there are a lot of mistakes being made in terms of how the tariffs are applied. And then also the whole thought of passing on tariffs to vendors is relatively new, and, you know, I do anticipate a fair amount of pushback, although I think that, ultimately, many customers will will pay for their agreements.

So we’re we’re really hoping that we can work through the tariff situation in the short term. But we do have in our contracts the ability to pass on taxes and tariffs. And so I I think over time, this will work out. But there’ll be some disruption, you know, in the industry in terms of cost for the, you the short term.

Anna Soderstrom, Analyst, Sidoti: Mhmm. Okay. Thank you. And then also, these large contracts you’ve been winning, and congrats on those, are they also higher margin programs then?

Cameron Forr, Interim CEO, Emtron: They are. And they they were actually some of the programs that I mentioned. We didn’t ship a lot of it in q one, which did impact our margins. Return to that. Sure.

Anna Soderstrom, Analyst, Sidoti: And then what does the pipeline look like for other large deals like that?

Cameron Forr, Interim CEO, Emtron: We actually have a pretty strong pipeline for the year. So we don’t really talk about bookings per se and give numbers on that, but we’ve had two very strong quarters of bookings. And and we do have a lot of large programs that we think we’ll be announcing over the next, you know, quarter or two. So, both missile programs as well as some in the avionic space. And and then in the back half of the year, we’re working on some really significant drone bookings and programs, which I think will be exciting for the company.

Anna Soderstrom, Analyst, Sidoti: Okay. Thank you. I’ll get back in queue.

Eric, Conference Operator: Mhmm. At this time, there are no further questions. I would now like to turn the call back over to Cameron Forte for closing remarks. Please go ahead.

Cameron Forr, Interim CEO, Emtron: Okay. Well, thank you, operator. I appreciate you helping us manage the call. And I’m gonna, like to thank everybody for participating today. And if there are no further questions, you know, please have a great day.

If you wanna follow-up, after the call, after you’ve kinda read the transcripts or you’ve had a chance to kinda go through the earnings release in more detail, feel free to contact us at irimtron dot com, and we will respond in kind. So thank you again.

Eric, Conference Operator: Ladies and gentlemen, this concludes today’s call. Thank you all for joining, and you may now disconnect.

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