M-tron Industries, Inc. 17th Annual Midwest IDEAS Conference

Cameron. Okay. Thank you, Jean, and thank you all for coming after lunch.

Really appreciate it. I think we're the only defense company here today at this conference. Hopefully give you a little bit of a window into what's happening in the defense sector. We're also in some other major areas like commercial aviation and things like that, which are doing very well. I'm happy to tell you about the company and answer any questions you have afterwards. First of all, here's our safe harbor statement. Just want to refer you to our 10-K that was published or filed in March 26th of this year with the SEC, just for risk factors. We just did our Q2 earnings announcement about 2 weeks ago, so there's an updated presentation online from that, our earnings call, and numbers there.

We'll talk about a lot of that, obviously, in our slides today. Briefly, M-tron, it's an interesting story. It's a company that's been around a long time, but it's really been transformed quite significantly over the past 4 or 5 years. We're a New York Stock Exchange-listed company. The ticker is MPTI. We went public in 2022 through a spin-out transaction from The LGL Group, Inc., which is a holding company that's been trading on the exchange, I think, since the 1920s. They've probably done 35 acquisitions over the years. We performed very well. I think we came out at $11 a share. I haven't looked today but usually I look many times a day. We're kind of hovering around the $80 mark right now per share. We went to as high as $102 about a month ago, per share.

A lot of that's based on what's happening in the defense sector and some of our wins there. We're fairly tightly held. We have 4.3 million shares outstanding. Lastly, very strong balance sheet. We have about $95 million of cash on the balance sheet, and we've raised about $70 million, I think, over the past 6 or 7 months through a warrant offering and then later a rights offering. We also have very broad employee ownership. Pretty much every employee in the company owns stock, and we're very aligned with where we're going as a company. That's a little bit about us. I'd say, why are we interesting? I think we're a very unique play in the U.S. defense market. Relatively small cap name. 70% of our revenues currently are from the defense sector. The next 20% are from commercial aviation.

We really focus on mission-critical applications of RF technologies, and we are a unique kind of American manufacturing capability in that area. There are not that many players that can service those markets from U.S. manufacturing and design standpoint, and we are one of the few there. We also have a very high percentage of our revenues now coming from missile content, so it is about 33% of our revenues, and there is obviously a lot in the news about missile replenishment and things like that, and this is one of the better ways to play that potentially. I think that we are really a platform right now for strong value creation, not only through our core business, our organic business, which has got some really great growth prospects, but also we have a very strong balance sheet and we have potential to do some nice M&A transactions.

That is definitely one of our goals. Just in terms of the investment highlights, strong revenue growth and cash generation. We have been profitable for many years. We have roughly 21%, 22% EBITDA margins, adjusted EBITDA margins. Very good tailwinds in our growth sectors, our long-term end markets. Aerospace and defense is getting stronger over the past several years, but it has been strong for many years. Also, the commercial aviation business is in a good spot with a long-term backlog going out to 2036. I think there are 16,000 airframes on order from Boeing and Airbus, and we are on every single airframe that they produce, so our growth there is pretty linear with the industry. As I mentioned before, we are a very unique capability, which is important for the defense sector.

There is much more interest than there was 10 years ago on U.S. manufacturing capabilities, and so that is something we are investing quite a bit in. We produce in Orlando, Florida, and also in South Dakota, in a town called Yankton. Have been there for many years and have a really great employee base, loyal base, and that enables us to supply a lot of the larger defense programs. I think from a financial perspective, we have had really good performance, and we are well-positioned for growth. We will talk about that a little bit. In terms of what makes us unique in addition to that is that, if you look at the RF sector, the RF sector has been around since the '60s.

It was basically founded by really smart engineers who left larger companies because they had a better way of making a particular product, and that is how our company started as well. M-tron today was two separate companies in the '60s and '70s. Each of them was founded by an IEEE fellow, so a really smart engineer, and they had each found a way to build a better mousetrap, essentially. Then over time, we came together in the 2004 timeframe, and it has made us really what is pretty unique in the industry. We have a very broad product set compared to others. We have competitors in the filter world. We have competitors in the oscillator world, but we do not have any competitors that do both that we really run into frequently. Also, we have taken a different approach than some have over the years.

The market itself is very delineated. There are a lot of suppliers to people like us, people that do plating, painting, machining, testing, et cetera. We've taken more of a vertical approach to it, so we've been vertically integrating those capabilities. That's helped us deliver in a shorter timeframe to our customers, and also at a more effective price point with a little bit higher margin. We're kind of gaining more control over our own destiny there. We've made a lot of investments in that area. We have a blue-chip customer base. We'll show you a number of the names later on a slide, but I think all 10 top defense primes globally are big customers of ours. We have over 70 customers, I think, have been customers for over 10 years.

We also have a lot of new companies that are really growing, and growing significantly, that have become strategic over the past couple of years, including many of the new defense primes or neo-primes, I think they're called. Then we've had nice market performance. Here's the management team. I joined two years ago as CFO. My background is, I spent a long time in banking. I was at Deutsche Bank and Alex. Brown before that. I raised a lot of money for companies in the sector, and also was active in M&A. I guess originally, my grounding was at Bain. Then I've run three companies in the government and defense sector. This is my third. Linda Biles, who's our EVP of Finance, is essentially managing all of our accounting teams.

She's been at M-tron for 20 years and has a longer career just in manufacturing, so extremely experienced on that side. Bill Drafts, who's our President and General Manager, is down in Florida. He's really managing that facility and our Ganges plants and capabilities. He comes out of the industry and started out in product management and is an engineer, has a lot of expertise in not only the market focus, but also in just the manufacture processing. Really good group. The board is also very diverse. People come out of either industry. We've had several people from L3, or even one of the L3 founders is on the board. Then also the investment community, mostly in New York. I'm not going to spend too much time on this slide, but it does give you a feel for it. We've been very innovative since the beginning.

We started in 1965. We were one of the first developers of certain types of filters and oscillators at the time. We've been involved in the space industry since the late 1960s. We came together in 2004, as I mentioned before, and that innovation continues. We've had a very good year selling, for example, internally compensated oscillators this year. That was a product that we developed in the late teens, and I think we're the only ones who are doing it right now. That's really created a great opportunity for us in the short term. If you look at our revenue base, about 30% of the revenue each year comes from products that were developed over the past three or four years. We continue to really emphasize that, and it gives us a lot of legs to continue to grow and stay very current.

Here is our product portfolio. I mentioned before, this is very broad for our sector. A lot of companies in this space will do one particular type of filter or one oscillator, and they grow to $8 million or $10 million of revenue, and they are content with that. We have taken a different approach. We have a broad family of products, and we also purchase products from other companies, which we integrate into modules and subsystems. We are trying to deliver more value to our customers and maintain a greater share of their BOMs. That is something we are going to continue to do as well. That is the RF solutions business on the bottom. That is about 7% of revenue. That is growing quite a bit. Our core strength is in crystal filters and oscillators. We have a lot of expertise in that area.