M-tron Industries (MPTI) Q3 2026 Earnings Call Transcript

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DATE

Thursday, Nov. 12, 2026

CALL PARTICIPANTS

• EVP of Finance - Linda Biles
• Chief Executive Officer - Cameron Pforr

TAKEAWAYS

• Revenue -- $15.7 million, up 11.1% driven by strong shipments in aerospace and defense, avionics, and space sectors.
• Gross Margin -- 44.5%, an increase of 20 basis points reflecting a favorable product mix.
• Net Income -- $3.0 million, an increase of 66.4% due to higher revenue and increased interest income from cash balances.
• Non-GAAP EPS -- $0.70 per diluted share, representing a 16.7% increase from $0.60 in the prior-year period.
• Adjusted EBITDA -- $3.6 million, an increase of 12.9% attributed to higher gross profit partially offset by increased administrative expenses.
• Backlog -- $84.9 million, an increase of 44.3% year over year and 11.0% since Dec. 31, 2025.
• Nine-month Revenue -- $45.5 million, up 13.3% versus the first nine months of the previous year.
• Radar and Electronic Warfare -- Growth exceeded 100% within these specific segments during the third quarter.
• Interest Income -- $851,000, significantly higher than $143,000 in the prior-year period due to larger cash balances in money market mutual funds.
• Capital Expenditures -- Over $4 million, representing 7% to 8% of revenue to support new production lines and capacity expansion.
• Cash and Cash Equivalents -- $97.5 million as of Sept. 30, 2026, compared to $20.9 million at the end of 2025.
• Book-to-Bill Ratio -- Slightly above 1 for the quarter, though management noted bookings remain lumpy due to timing factors.
• 2028 Revenue Guidance -- Management projects revenue growth in the high teens based on anticipated missile replenishment cycles.
• 2027 Gross Margin Guidance -- Expected to range between 43% to 46% as the company scales production.
• Operating Income -- $2.4 million, a slight decrease from $2.6 million due to higher engineering, selling, and administrative expenses.

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RISKS

• Pforr stated, "our bookings are very lumpy, and timing is subject to a lot of factors, including the current political environment in Washington," noting that several large orders originally expected in Q3 or Q4 of 2026 are now anticipated in early 2027.
• Pforr warned that if purchase orders match projected growth rates in missile contracts, the company could be "having to create a new facility, either Orlando or somewhere else in the country" to meet demand in years like 2029 and 2030.

SUMMARY

M-tron Industries, Inc. (NYSEMKT:MPTI) reported a profitable third quarter driven by sustained demand in the defense and aerospace markets, particularly for radar and electronic warfare systems. Management reported that the company is transitioning toward more program-based business, which now constitutes the majority of its aerospace and defense revenue. To address this demand, the company has increased its capital expenditures and initiated an active hiring program. Management stated that while fiscal 2027 will be a building year focused on scaling production, they anticipate revenue growth will accelerate into 2028 as new multiyear missile production contracts begin to impact the top line.

• Management is currently executing on a potential acquisition that fits its inorganic growth strategy and expects to announce the transaction by the end of 2026.
• Pforr noted that recent workforce reductions at Boeing are not expected to impact results for 2026 or 2027, as orders for that sector are currently working through a prior three-year cycle.
• The company is expanding its manufacturing capacity in Orlando, Florida, to support national interests and the replenishment of missile stockpiles.
• Management identified $127 billion in multiyear contract awards to major defense primes like Raytheon and Lockheed Martin as a significant long-term driver for Mtron's frequency control components.
• Strategic investments in research and development and newly designed products, such as oven-controlled oscillators, are finding high demand among both traditional and emerging radar vendors.

INDUSTRY GLOSSARY

• Frequency Control: Devices such as oscillators and resonators that control the timing and frequency of electronic signals.
• Spectrum Control: RF, microwave, and millimeter wave filters and subsystems used to manage signal interference and quality.
• OCXO (Oven-Controlled Crystal Oscillator): A high-precision oscillator that uses a temperature-controlled chamber to maintain frequency stability.
• RF (Radio Frequency): Electromagnetic signals used for wireless communication, radar, and electronic warfare.
• Book-to-Bill Ratio: The ratio of orders received to units shipped and billed, where a ratio above 1 indicates increasing demand.
• GaN (Gallium Nitride): A semiconductor material used in high-frequency and high-power applications like amplifiers and radar systems.

Full Conference Call Transcript

Operator: 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, EVP of Finance. Linda, please go ahead.

Linda Biles: Good afternoon, everyone. Thank you for joining our 2026 M-tron Q3 earnings call. Please note that this call will be recorded, and we will make the recording available on our Investor Relations website, ir.mtron.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 as 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 Act -- 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 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 CEO, Cameron Pforr.

Cameron Pforr: Okay. Well, thank you, Linda, and good afternoon, everyone. Thank you for attending our third quarter earnings call and your interest in M-tron. We had 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, M-tron 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 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 '26 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 to $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, 2025. 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 key supplier to numerous precision-guided munition programs, including many of the programs that were included in the 7-year framework agreements signed between the Department of War and Raytheon and Lockheed Martin in the early spring of 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 AMRAAM. 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. Oven-controlled oscillators are growing quite strongly, finding 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 3-pronged inorganic growth strategy, which includes M-tron acting as a holding company, M-tron serving as a vehicle for larger corporate carve-outs or reverse mergers, and M-tron 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 in its mission of serving the nation and our dedicated customers for their continued business and partnership. M-tron plays a critical role in the defense of our nation by providing U.S.-sourced highly engineered components for many 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 wanted 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 Cowen 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 if you have time. With that, operator, can you open the lines and allow the first question?

Operator: [Operator Instructions] Your first question comes from the line of Anja Soderstrom with Sidoti.

Anja Soderstrom: Congrats on the nice progress here. So it seems like you expect a lot of backlog growth in 2027 and that benefits the 2028 revenue. So should we expect revenue to accelerate in terms of growth in 2028 over 2027?

Cameron Pforr: Yes. Good question, Anja. 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 13% over 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 in '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.

Anja Soderstrom: Okay. And then the gross margin was quite high due to product mix. How should we think about that in the coming quarters?

Cameron Pforr: Right. So earlier in the year, we had some headwinds with some of the products that we were producing that were 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 it will be 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.

Operator: There are no further questions at this time. Anja, if you would like to raise your hand, you may ask another question.

Anja Soderstrom: Can you also just elaborate on this defense programs that you are talking about maybe coming into 2027? And what do you expect, like, in terms of the defense budget?

Cameron Pforr: Yes. I just want to make sure I understood the question. Was it about the current programs or the ones we anticipate closing early in the year?

Anja Soderstrom: The ones that you are bidding on.

Cameron Pforr: Yes. Okay. So yes, I mean, obviously, the defense budget is definitely in a state of flux right now, and the administration has divided 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 7 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 grow 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.

Anja Soderstrom: And is that mostly U.S.-driven? Or do you see a demand also from Europe or NATO?

Cameron Pforr: No, it's primarily U.S.-driven, but some of the current sales that we do are sanctioned under Foreign Military Sales and do go overseas.

Anja Soderstrom: Okay. And then you mentioned you hired a corporate development to this team there. Can you tell us more about what you're looking for and how imminent, like, are you very close to something or...

Cameron Pforr: Yes. No, thank you for asking. So yes, we've been looking for quite a while, but we also all have day jobs. So we've been -- we do have one deal that we're trying to get announced before the end of the year, which would be really right up our alley in terms of the products and the markets that it serves, and will be well understood in terms of how it's manufactured. So, it's an RF product. And -- but we are looking further at additional RF companies that are maybe a little bit larger and or a little further afield than what we currently do. So it'll take a little bit more analysis.

And then we also are pretty regularly engaged with larger companies looking to do 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 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.

Anja Soderstrom: 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 years?

Cameron Pforr: 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, will still be also a strong year of CapEx growth. What we're trying to understand, though, 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 if so, how 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.

Anja Soderstrom: And is there an opportunity for you to expand actually your footprint in Orlando? Would you need to add a new facility?

Cameron Pforr: 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 Orlando or somewhere else in the country, just, kind of, meet the demand in years like '29, '30.

Operator: There are no further questions at this time. I will now turn the call back to Cameron Pforr for closing remarks.

Cameron Pforr: Yes, I'd like to thank everybody for participating in today's call and your interest in M-tron. Have a great day, and please don't hesitate to reach out to ir@mtron.com should you have additional questions. We like to actively engage with our investors and encourage your inputs and your questions. Thanks again.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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