M-tron Industries, Inc. Q4 FY2025 earnings call

• Company continued strong performance in Q4 FY2025 with defense and avionics strength. Backlog grew 62% y-o-y. - FY2026 defense budget approved, with desire to increase military procurement. Amtron is significant vendor to Lockheed Martin and Raytheon for missile systems. - Made strategic investments in R&D, production facilities, and equipment upgrades. - In 2025, formed three strategic partnerships, announced rights offering for acquisition strategy. - In FY2025, added $10.7 million cash through operations, signed new loan agreement, closed warrant offering raising $27.5 million.

For Q4 FY2025: Total revenues were 14.2 million, +11.2% y-o-y. Gross margin 46.9% (vs 47.2% Q4 2024). Net income per diluted share 99 cents (vs 73 cents Q4 2024). Adjusted EBITDA 4.5 million, +46.8% y-o-y. Backlog 76.4 million (vs 47.2 million Dec 31, 2024). For FY2025: Total revenues 54.4 million, +11.2% y-o-y. Gross margin 44.4% (vs 46.2% 2024). Net income 8.4 million, $2.62 per diluted share (vs 7.6 million, $2.65 per share 2024). Adjusted EBITDA 12.6 million (vs 11.1 million 2024). Revenue contribution: Defense-related orders and avionics shipments drive revenues, with defense making up a significant portion, especially missile systems.

• Expect strong growth in 2026-2027 in radar and electronic warfare due to military radar redesign and counter-drone radar demand. - Anticipate continued strong growth from commercial avionics shipments as airframe manufacturers have strong backlog. - Rights offering expected to support accretive acquisitions, carve outs, scaling, strategic investments, and expanding internal capabilities.

• Forward-looking statements subject to known and unknown risks and uncertainties detailed in SEC filings. - Tariffs could impact gross margins, and product mix changes may affect results. - Industry changes and market dynamics could impact ability to execute on growth strategies and acquisitions.

Q: What's the motivation for the rights offering?

A: Reflects industry changes, demand in market, pressure from primes to be nimble, allows taking advantage of opportunities, strengthens balance sheet for executing on processes and being included in transactions.

Q: How to think about gross margin growth next year?

A: Impact in Dec 2025 from tariffs and product mix, expect more favorable product mix and slightly more favorable tariff environment in 2026, but tariffs are a moving target.

Q: What was most of the backlog growth coming from?

A: Defense, aerospace, and avionics, with space also seeing increase earlier in the year and hope for more in 2027-2028 from Golden Dome initiatives.

Q: How meaningful is drone exposure today and can it become more material?

A: Drones are an active part, sell to manufacturers of larger drones, not FPV drones, radar systems also impacted by drone warfare, radar revenue expected to be around $4 million in 2026