Micro Cap Ideas

[gfp927z]

>>> M-tron Industries, Inc. Reports Strong Second Quarter 2024 Results with Further Margin Expansion


Business Wire

Aug 14, 2024


https://finance.yahoo.com/news/m-tron-industries-inc-reports-130100152.html


ORLANDO, Fla., August 14, 2024--(BUSINESS WIRE)--M-tron Industries, Inc. (NYSE American: MPTI) (the "Company" or "MPTI"), a designer and manufacturer of highly-engineered electronic components used to control the frequency or timing of signals in electronic circuits, announced strong financial results for the three and six months ended June 30, 2024 with net income increasing 36.6% to $1,744,000, or $0.63 per diluted share, in Q2 2024 compared to $1,277,000, or $0.47 per diluted share, in Q2 2023.

MPTI's Chief Executive Officer, Michael J. Ferrantino, said, "Our strategy is working; our business has been trending up since the Company’s listing in 2022, and are pleased to report results that continue to be very positive. We expect revenues, new orders and earnings to remain strong and trend higher. In addition, our order backlog trend since listing is positive and anticipated to continue to grow."

The Company will hold an Investor call on Thursday, August 15, 2024, to discuss the Company's second quarter 2024 results and to respond to investor questions (see details below). An archive of the call will be available on MPTI's website at https://ir.mtronpti.com/events-and-presentations.

Strong Results from Operations Continue Since 2022 Listing

Strategic investments in the defense sector, several new products moving into volume production, and operating efficiencies have resulted in the Company achieving significant improvements since its IPO in October 2022. Importantly, the company made a significant investment in its employees with a broad option incentive grant earlier this year aligning the strength of its platform with its team.

Since MPTI's October 2022 IPO, the business has grown significantly as highlighted below:

Revenues increased 67.2% to $11,808,000 in Q2 2024 compared to $7,064,000 in Q2 2022

Net income increased 258.8% to $1,744,000 in Q2 2024 compared to $486,000 in Q2 2022

Gross margin improved to 46.6% in Q2 2024 compared to 37.5% in Q2 2022

Adjusted EBITDA increased 200.0% to $2,523,000 in Q2 2024 compared to $841,000 in Q2 2022

The opportunities with new engineering and designs continues to drive future growth, while manufacturing throughput improvement is helping increase margin expansion. Further, we are pleased to have initiated a stock option program earlier this year allowing the professionals at MPTI an opportunity to share in the business’s growth.

Mr. Ferrantino added, "As we report strong results, our team's pursuit of excellence accelerates as reflected in the value creation since IPO. This continued growth and success are a testament to our dedicated professional staff and their unwavering commitment to delivering exceptional value to our customers. We remain steadfast in our mission to innovate, adapt, and lead in our industry, driving sustainable growth and creating long-term value for all stakeholders."

"MPTI is a uniquely positioned American-made Defense product platform and presents an improved outlook for the business moving forward," continued Mr. Ferrantino.

Second Quarter 2024

Net income was $1,744,000, or $0.63 per diluted share, for the three months ended June 30, 2024 compared with $1,277,000, or $0.47 per diluted share, for the three months ended June 30, 2023. The increase was primarily due to continued strong defense program product and solution shipments partially offset by higher Manufacturing cost of sales consistent with the growth in revenues as well as higher Engineering, selling and administrative expenses from increased investment in research and development, higher sales commissions related to an increase in revenues, and an increase in administrative and corporate expenses consistent with the overall growth in the business.

Gross margin was 46.6% for the three months ended June 30, 2024 compared with 41.6% for the three months ended June 30, 2023. The increase was primarily due to higher revenues, improved production efficiencies due to previous investments, and an improved product mix to higher margin products.

Adjusted EBITDA was $2,523,000, or $0.91 per diluted share, for the three months ended June 30, 2024 compared with $1,931,000, or $0.71 per diluted share, for the three months ended June 30, 2023. The increase was primarily due to increased gross margins; continued containment of operating expenses other than strategic investments in research and development, resulting in higher income before taxes; higher depreciation; and higher stock-based compensation partially offset by higher interest income.

Results in Second Quarter 2024 and Since Second Quarter 2022

Revenues increased 16.4% to $11,808,000 in Q2 2024 compared to $10,140,000 in Q2 2023, driven by strong defense program shipments, and increased 67.2% from $7,064,000 in Q2 2022 as the mix shifts developed

Net income increased 36.6% to $1,744,000, or $0.63 per diluted share, in Q2 2024 compared to $1,277,000, or $0.47 per diluted share, in Q2 2023 and increased 258.8% from $486,000 in Q2 2022

Gross margin improved to 46.6% in Q2 2024, an increase of 12.0% from Q2 2023, and an increase of 24.3% from Q2 2022, reflecting improved production efficiencies and product mix

Adjusted EBITDA increased 30.7% to $2,523,000 in Q2 2024 compared to $1,931,000 in Q2 2023 and increased 200.0% from $841,000 in Q2 2022

Improved 2024 Outlook

With the continued momentum in defense-related sales, and the acceleration in production and shipments during the first half of 2024, MPTI management has raised the outlook for fiscal year 2024, increasing revenues to a range of $46.0 million to $48.0 million from a previous range of $43.0 million to $45.0 million. MPTI has good visibility for the remaining two quarters of 2024 and expects EBITDA to continue to be in the 19% to 21% range.

The foregoing statements represent the Company's current estimates of MPTI's 2024 consolidated revenues as of the date of this release. Actual results may differ materially depending on a number of factors. Investors are urged to read the Cautionary Note Concerning Forward Looking Statements included in this release. Management does not assume any obligation to these estimates.

Fiscal Year to Date 2024

Net income was $3,230,000, or $1.16 per diluted share, for the six months ended June 30, 2024 compared with $1,830,000, or $0.68 per diluted share, for the six months ended June 30, 2023. The increase was primarily due to higher sales related to strong defense program product shipments partially offset by higher Manufacturing cost of sales consistent with the growth in revenues as well as higher Engineering, selling and administrative expenses related to increased investment in research and development, higher sales commissions related to an increase in revenues, and an increase in administrative and corporate expenses consistent with the overall growth in the business.

Gross margin was 44.7% for the six months ended June 30, 2024 compared with 38.0% for the six months ended June 30, 2023. The increase was primarily due to higher revenues, improved production efficiencies due to previous investments, and an improved product mix to higher margin products.

Adjusted EBITDA was $4,785,000, or $1.72 per diluted share, for the six months ended June 30, 2024 compared with $2,959,000, or $1.09 per diluted share, for the six months ended June 30, 2023. The increase was primarily due to increased gross margins; a continued containment of operating expenses other than strategic investments in research and development, resulting higher income before income taxes; higher depreciation; and higher stock-based compensation partially offset by higher interest income.

Backlog

Backlog was $45,322,000 as of June 30, 2024 compared to $47,831,000 as of December 31, 2023 and $51,591,000 as of June 30, 2023. The decrease in Backlog from December 31, 2023 reflects the increase in revenues along with the variability of our order intake due to the size and timing of large program-related orders.

Strategic Direction Continues

"We delivered a solid performance in the quarter, with significant improvements in our financial results," said Bel Lazar, Chairman. "Our teams continue to execute well, driving both top-line growth and margin expansion across our businesses. Our commitment to achieving our Investor Day targets remains strong, with clear progress in our new products, pricing and efficiency initiatives. With this momentum we are confident in our continued success and growth."

Mr. Lazar continued regarding the Company’s strategy, "Our organic strategy continues to be providing complex, integrated assemblies. This will begin to surface in revenue growth. The dollar value of some of these projects can be substantial.

"As for our external strategy, we have increased our acquisition bandwidth to include companies that are inside and outside of our current space. We will look outside of our sub sector for undervalued companies much like ours where we can rapidly drive top and bottom-line growth. Our motivation continues to be increasing shareholder value as quickly as we can," added Mr. Lazar.

We see the ongoing development along several new and exciting growth verticals for the period ahead such as:

Space and Satellite: MPTI has over 125 design wins across satellite platforms and manned spacecraft. With expertise supporting LEO, MEO and GEO applications, the Company has a well-established team and a proven track record to meet demanding space requirements. With the evolving need for high-power space-level transmitters, high-power handling space-level RF components and sub-assemblies are instrumental for mission success. The performance of these devices used in orbiting satellites are significantly different compared to how they perform at sea level due to phenomena like multipaction. Some space-level applications require both continuous operation performance in outer space as well as performance during the assent to space while undergoing a pressure change.

Radar: Our latest line of timing solutions designed to meet the stringent requirements of modern radar applications is expect to further growth. For example, our e-Vibe™ series of Electronically Compensated OCXOs are designed to maintain exceptional phase-noise under dynamic conditions, meeting the rigorous demands of radar systems on the move or experiencing shock or vibration. Our radar integrated timing solutions: custom timing solutions integrating precision timing sources with additional components with maximum reliability and performance. Our systems offer excellent Phase-noise: output frequencies with extremely low phase-noise, guaranteeing reliable operation over extended periods, temperatures, and environments. Also, our systems offer Ruggedized Design and Flexible Configurations for durability and longevity, with both standard and custom output frequencies.

Electronic Warfare: As demand increased for frequencies above 2 GHz, we developed the ability to design and manufacture planar filters utilizing interdigital, combline, hairpin, edge coupled and end coupled topologies. MPTI introduced our new Planar Filter Product Line to complement our over 59 years MPTI of designing and manufacturing various topology filters for our Industrial, Commercial, Space, Aerospace and Defense customers. With Extremely Small Size and Low Height and Stable Over a Wide Temperature Range, MPTI’s planar filters support the demands of rugged, high-performance applications needs growing with the development of Electronic Warfare.

Investor Call

Management, including MPTI's CEO, Michael Ferrantino, will host a conference call with the investment community on Thursday, August 15, 2024, to discuss the Company's second quarter 2024 results and to respond to investor questions.

The call will begin at 10:30 a.m. Eastern Time (U.S. and Canada) on Thursday August 15, 2024, and can be accessed using the dial-in details below:

Toll-Free Dial-in Number:

[phone]

Toll Dial-in Number:

[phone]

Conference ID:

8891215

An archive of the call will be available after the call on Events and Presentations page on the Investor Relations section of MPTI’s website at https://ir.mtronpti.com/events-and-presentations, along with MPTI’s earnings release.

<<<



---