M-tron Industries, Inc. (AMEX:MPTI) Q4 2023 Earnings Call Transcript

M-tron Industries, Inc. (AMEX:MPTI) Q4 2023 Earnings Call Transcript March 26, 2024

M-tron Industries, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning. My name is Dennis, and I will be your conference operator today. At this time, I would like to welcome everyone to the M-tron Industries, Inc. Investor Call for Fiscal 2023 Results. [Operator Instructions] I would now like to turn the conference over to James Tivy, Chief Financial Officer. Please go ahead.

James Tivy: Thank you, Dennis. Good morning, everyone, and thanks for joining our 2023 Q4 and annual earnings call. Please note that this call will be recorded, and we anticipate making the recording available on our website shortly after the call. We have issued our 10-K yesterday evening reporting our fourth fiscal quarter of 2023, along with the annual results. Before getting underway, we are required to advise you and all participants should note that the following discussion should be taken in conjunction with the most recent financial statements and notes thereto contained within our 2023 10-K, which has been filed with the SEC on March 25, 2024. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934.

These forward-looking statements involve known and unknown risks and uncertainties, which are detailed in our filings with the SEC. Although the company believes that its forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there can be no assurances that the company's actual results will not differ materially from any results expressed or implied by the company's forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements 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'll now turn the call over to Mike Ferrantino, our CEO.

Michael Ferrantino: Thank you, James. Good morning, and thank you to our shareholders for your interest in us and attending our annual earnings call. The completion of the fourth quarter, also marks the completion of our first full calendar year as a public company. As a brief reminder, MtronPTI has been providing RF solutions to the marketplace since 1965. We are a global company with three manufacturing locations in the U.S. and India. With consistent investment in research and development, we have a robust product pipeline, averaging 260 new product introductions a year. Our customer base is growing with over 300 active customers today. We continue to focus on our core markets of defense and aerospace, avionics and space, each of which continues to demonstrate significant tailwinds.

Design wins in these markets tend to be very sticky and program life cycles are long. Let me now summarize for you where MtronPTI stands for the 2023 year. Total revenues for the year ended December 31, 2023, were $41.2 million, a 29.3% increase from the prior year, reflecting strong aerospace and defense product shipments. Gross margins improved to 40.7% compared to 35.6%, reflecting our increase in business volume and effects of product mix changes. Our order backlog was $47.8 million, an increase of 3.6% compared to the prior year. In 2023, our book-to-bill ratio was 1.04. Our sales funnel continues to be strong as we continue with new product offerings while focusing on providing excellent technical solutions and customer service. During the fourth quarter, all MtronPTI full time employees below the executive level were issued a one-time stock option grant based on their respective years of service.

The purpose of the grant was to reward employees for their past contribution to the company and serves to align employee interests with those of the stockholders. The company recorded a $2 million -- the company recorded $2 million of stock-based compensation expense related to this one-time grant during the fourth quarter, which will have no impact on our 2024 financial outlook or results. The company reported an operating income of $4.3 million for 2023 compared to operating income of $2.9 million for the prior year. This increase reflects higher revenues and margins effects from product mix changes, offset by increased engineering, selling and administrative expenses. Excluding the $2 million one-time expense for stock options, engineering, selling and administrative expenses would have been 25.4% of revenue versus 26.6% recorded for the prior year.

Our quarterly income before income taxes grew incremental each quarter during 2023 from $700,000 in Q1 to $2 million in Q3. Without the impact of the $2 million one-time expense related to stock option grants, we would have recorded $2.1 million before taxes for the fourth quarter of 2023. Net income was $3.5 million for the year ended December 31 compared to $1.8 million for the prior year. Diluted income per share was $1.28 versus $0.67 per share for the prior year. Adjusted EBITDA, a non-GAAP measure, was $7.7 million for the 2023 year versus $4 million for the prior year, a portion of which was reported on a standalone basis. Note that adjusted EBITDA does not include any adjustments for the potential impact from the additional cost of being a publicly traded company.

Management calculated the incremental direct cost of being a public company, which do not have any comparable amounts in the prior year when results were presented partially on a standalone basis at $107,000 and $842,000 for the quarter and year ended December 31, 2023, respectively. In conclusion, with a strong backlog and a robust pipeline, we believe we are well-positioned for continued organic growth. We are working diligently to drive efficiencies throughout the organization by leveraging our India operation, while making key investments in talent and equipment to improve yields and reduce cycle times. We are also working hard on potential acquisitions with a focus on companies or carve-outs that provide synergistic products, increased technical capabilities and/or access to new and growing markets.

As we conclude, I would like to thank our dedicated customers for their continued orders in support of our products, along with our team of worldwide employees and representatives who continue to execute diligently on our plans for growth. Each of whom are ultimately responsible for providing our shareholders with excellent financial results. I'll now open the floor to questions. Operator, please open the call to any questions.

Operator: [Operator Instructions] And your first question is from the line of Anja Soderstrom with Sidoti. Please go ahead.

See also 20 Hottest Countries in Asia and 20 Biggest Health Care Companies in Australia, 2024.

To continue reading the Q&A session, please click here.