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M-tron Industries, Inc. Reports Third Quarter 2022 Results

ORLANDO, Fla.--(BUSINESS WIRE)--M-tron Industries, Inc. (NYSE American: MPTI) (“Company” or “MtronPTI”) announced its financial results for the three and nine months ended September 30, 2022.

  • Revenue of $8.4 million for the three months ended September 30, 2022, an increase of 17.3% compared to $7.2 million for the comparable prior year period. For the nine months ended September 30, 2022, revenues were $23.2 million, a 16.8% increase from $19.8 million for the comparable prior year period.
  • Basic and diluted net income of $0.19 per share compared to $0.24 for the prior year quarter, and income per share of $0.60 for the nine months versus income of $0.58 for the comparable prior year period.
  • Backlog of $44.1 million at September 30, 2022, an increase of 49.7% compared with $29.4 million at the end of Q4 2021, and up 102.4% compared to $21.8 million at September 30, 2021.
  • Unused and undrawn revolving line of credit of $5.0 million at September 30, 2022.
  • EBITDA for the nine months ended September 30, 2022 was $2.5 million versus $2.3 million for the comparable prior year period.

Michael Ferrantino, MtronPTI’s Chief Executive Officer, stated, “MtronPTI increased its backlog for a third straight quarter and our outlook for the near future is bright. MtronPTI begins the fourth quarter as a newly public company on strong financial footing. We would like to thank our customers, stockholders and especially our employees for their continuing support in our journey.”

Results from Operations

The Company has one business segment; electronic components, focused on the design, manufacture and marketing of highly engineered, high reliability frequency and spectrum control products. These electronic components ensure reliability and security in aerospace and defense communications, low noise and base accuracy for laboratory instruments, and synchronous data transfers throughout the wireless and Internet infrastructure.

Total revenues were $8,417,000 for the three months ended September 30, 2022, or 17.3% above revenues of $7,173,000 for the three months ended September 30, 2021. Total revenues were $23,172,000 for the nine months ended September 30, 2022, or 16.8% above revenues of $19,834,000 for the nine months ended September 30, 2021. The revenue increase reflects the recovering avionics market and strong defense product shipments.

Gross margin declined to 32.4% for the three months ended September 30, 2022 from 35.4% for the three months ended September 30, 2021 and improved to 35.6% for the nine months ended September 30, 2022, from 35.3% for the nine months ended September 30, 2021 reflecting increased operating costs and inflationary headwinds due to labor and materials cost increases on long term contracts and the effects of product mix changes which were offset by the impact from higher revenues. We continue to experience the effects of increased turnover that began during the COVID-19 pandemic (“Covid”), which increases our labor costs while also impacting productivity as we work to train new employees.

Backlog was $44,074,000, an increase of 49.7% from $29,439,000 at December 31, 2021 and an increase of 102.4% compared to the backlog of $21,775,000 as of September 30, 2021. The Company attained record backlog levels as of September 30, 2022. Quarterly bookings were $9,259,000, $13,473,000 and $15,075,000 for the third, second and first quarters of 2022, respectively and $14,524,000 for the fourth quarter of 2021. This booking trend in excess of our product shipments reflects strong defense orders, much of which is not expected to ship until 2023 and into 2024. Strong orders from the recovering avionics market also drove the increase in 2022 bookings over 2021 bookings. Supply chain constraints within our industry have pushed our customers to order well in advance to secure product deliveries for their production requirements.

The Company reported operating income of $630,000 for the third quarter of 2022 compared to operating income of $821,000 for the third quarter of 2021 and $2,047,000 for the nine months ended September 30, 2022 compared to operating income of $1,916,000 for the nine months ended September 30, 2021. The decrease for the three months reflects higher revenue and margins offset by product mix and inflationary pressures in the third quarter of 2022. The increase for the nine months reflects higher revenue and margins partly offset by inflationary cost pressures and increased stock compensation expense in the first nine months of 2022.

Net income was $503,000 for the three months ended September 30, 2022 compared to $638,000 for the three months ended September 30, 2021, and $1,608,000 for the nine months ended September 30, 2022 compared to $1,556,000 for the nine months ended September 30, 2021. The decrease for the three months was primarily from the previously discussed unfavorable product mix, inflation, and increased operating costs, offset by increased business volume. The increase for the nine months was primarily from the previously discussed increased business volume partly offset by certain unfavorable operating costs. Basic and diluted net income per share for the three months ended September 30, 2022 and 2021 was $0.19 and $0.24, respectively, and for the nine months ended September 30, 2022 and 2021 was $0.60 and $0.58, respectively.

EBITDA on a standalone basis was $2.5 million for the nine months ended September 30, 2022 versus $2.3 million for the nine months ended September 30, 2021. EBITDA on a standalone basis does not include the potential impact from additional costs of being a publicly traded company.

MtronPTI’s Separation

On August 3, 2022, The LGL Group, Inc. (“LGL Group,” “LGL” or the “Former Parent”) announced that its Board of Directors approved the previously announced separation of the MtronPTI business into an independent, publicly traded company (the "Separation").

On October 7, 2022, the Separation was completed through LGL Group’s distribution of 100% of the shares of the Company’s common stock to holders of LGL Group's common stock as of the close of business on August 12, 2022, the record date for the Distribution. As a result of the Distribution, LGL Group's stockholders of record received one-half of one share of the Company's common stock for every share of LGL Group's common stock held by them. On October 7, 2022, the Company became an independent, publicly traded company trading on the NYSE American under the stock symbol "MPTI." LGL Group retained no ownership interest in the Company as of the completion of the Separation.

In connection with the Separation, the Company wrote off $4,439,000 of intercompany receivables due from LGL Group, which brought intercompany balances to zero, and also made a cash payment of approximately $6,000 to LGL Group on October 7, 2022, bringing the Company’s cash balance to $1,000,000 as of the date of the Separation.

We believe the Separation of MtronPTI will allow the Company to tailor its strategic plans and growth opportunities, more efficiently raise and allocate resources, including capital raised through debt or equity offerings, provide flexibility to use its own stock as currency for incentive compensation and potential acquisitions and provide investors a more targeted investment opportunity.

MtronPTI Investor Call and Webcast

As a reminder, we will be hosting an investor call and webcast tomorrow, November 15, 2022 at 9:00 am

Investors and other interested parties may access a live webcast of the conference call using the following details:

https://event.on24.com/wcc/r/3986501/5FFC0A7F646E843A4487002ED1A3F144

The call can also be accessed live via telephone using the following dial-in details:

Toll-Free Dial-In Number: (888) 440-4199

Toll Dial-In Number: (646) 960-0818

Conference ID: 6978153

Please log in to the webcast to register or dial in to the call at least 15 minutes prior to the start of the event. Note that you will need to register in advance for the webcast and must dial in if you want to ask any questions in the Q&A session immediately following the investor presentation.

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

 

M-tron Industries, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

(Amounts in Thousands, Except Share and Per Share Amounts)

 

 

Three months ended

 

 

Nine months ended

 

 

September 30,

 

 

September 30,

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

REVENUES

$

8,417

 

 

$

7,173

 

 

$

23,172

 

 

$

19,834

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Manufacturing cost of sales

 

5,688

 

 

 

4,636

 

 

 

14,919

 

 

 

12,838

 

Engineering, selling and administrative

 

2,099

 

 

 

1,716

 

 

 

6,206

 

 

 

5,080

 

OPERATING INCOME

 

630

 

 

 

821

 

 

 

2,047

 

 

 

1,916

 

Total other income (expense), net

 

(16

)

 

 

(21

)

 

 

(47

)

 

 

12

 

INCOME BEFORE INCOME TAXES

 

614

 

 

 

800

 

 

 

2,000

 

 

 

1,928

 

Income tax provision (benefit)

 

111

 

 

 

162

 

 

 

392

 

 

 

372

 

NET INCOME

$

503

 

 

$

638

 

 

$

1,608

 

 

$

1,556

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of basic and diluted shares

 

2,676,469

 

 

 

2,676,469

 

 

 

2,676,469

 

 

 

2,676,469

 

net income per basic and diluted share

$

0.19

 

 

$

0.24

 

 

$

0.60

 

 

$

0.58

 

 

 

M-tron Industries, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(Amounts in Thousands)

 

 

 

September 30,

2022

 

 

December 31,

2021

 

 

September 30,

2021

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

806

 

 

$

2,635

 

 

$

1,843

 

Accounts receivable, net

 

 

5,336

 

 

 

3,995

 

 

 

4,456

 

Inventories, net

 

 

7,298

 

 

 

5,221

 

 

 

5,007

 

Prepaid expenses and other current assets

 

 

142

 

 

 

242

 

 

 

255

 

Total Current Assets

 

 

13,582

 

 

 

12,093

 

 

 

11,561

 

Property, plant, and equipment, net

 

 

3,559

 

 

 

3,382

 

 

 

3,181

 

Right-of-use lease asset

 

 

160

 

 

 

218

 

 

 

148

 

Due from related party

 

 

4,465

 

 

 

1,969

 

 

 

1,484

 

Intangible assets, net

 

 

112

 

 

 

152

 

 

 

165

 

Deferred income taxes, net

 

 

1,885

 

 

 

2,187

 

 

 

2,308

 

Other assets, net

 

 

18

 

 

 

5

 

 

 

8

 

Total Assets

 

$

23,781

 

 

$

20,006

 

 

$

18,855

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

Total Current Liabilities

 

 

4,726

 

 

 

3,012

 

 

 

2,142

 

Long-Term Liabilities

 

 

91

 

 

 

145

 

 

 

99

 

Total Liabilities

 

 

4,817

 

 

 

3,157

 

 

 

2,241

 

Total Stockholders' Equity

 

 

18,964

 

 

 

16,849

 

 

 

16,614

 

Total Liabilities and Stockholders' Equity

 

$

23,781

 

 

$

20,006

 

 

$

18,855

 

 

UNAUDITED PRO FORMA COMBINED BALANCE SHEET

The unaudited pro forma combined balance sheet has been prepared to include transaction accounting adjustments to reflect the financial condition and results of operations as if MtronPTI were a separate stand-alone entity as if the spin-off had occurred as of September 30, 2022. The unaudited pro forma combined balance sheet constitutes forward-looking information and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. In addition, the unaudited pro forma combined balance sheet is provided for illustrative and informational purposes only. The pro forma adjustments are based on available information and assumptions that management believes are reasonable; however, such adjustments are subject to change.

Transaction accounting adjustments that reflect the effects of MtronPTI’s legal separation from LGL include:

  • The contribution by the Company of the companies that comprise MtronPTI and the retention by the Company of certain specified assets and liabilities reflected in our historical combined financial statements, in each case, pursuant to the Separation and Distribution Agreement;
  • The anticipated post-separation capital structure, including: (i) the true up of cash balances to $1.0 million; and (ii) the issuance and distribution in kind of our common stock to holders of LGL common stock;
  • The impact of, and transactions contemplated by, the Separation and Distribution Agreement, Tax Matters Agreement, and other agreements related to the separation of MtronPTI and the provisions contained therein; and
  • The resulting elimination of LGL’s net investment in us.

The pro forma financial information presented herein reflects all Management’s Adjustments that are, in management’s opinion, necessary to a fair statement of the pro forma financial information presented.

Our retained cash balance is subject to adjustments prior to and following the completion of the separation. The following unaudited pro forma combined balance sheet reflects the adjustments as of September 30, 2022, but such adjustments represent a financial projection and are subject to change upon completion of the spin-off.

 

M-tron Industries, Inc.

Unaudited Pro Forma Combined Balance Sheet

As of September 30, 2022

 

(Amounts in Thousands, Except Share and Par Value Amounts)

 

 

 

Historical

 

Transaction Accounting Adjustments

 

 

Pro Forma

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

806

 

$

194

 

(a)

$

1,000

 

Accounts receivable, net of allowance of $131

 

 

5,336

 

 

 

 

 

5,336

 

Inventories, net

 

 

7,298

 

 

 

 

 

7,298

 

Prepaid expenses and other current assets

 

 

142

 

 

 

 

 

142

 

Total Current Assets

 

 

13,582

 

 

194

 

 

 

13,776

 

Property, Plant and Equipment

 

 

 

 

 

 

 

 

 

 

 

Land

 

 

536

 

 

 

 

 

536

 

Buildings and improvements

 

 

4,877

 

 

 

 

 

4,877

 

Machinery and equipment

 

 

18,831

 

 

 

 

 

18,831

 

Gross property, plant and equipment

 

 

24,244

 

 

 

 

 

24,244

 

Less: accumulated depreciation

 

 

(20,685

)

 

 

 

 

(20,685

)

Net property, plant and equipment

 

 

3,559

 

 

 

 

 

3,559

 

Right-of-use lease asset

 

 

160

 

 

 

 

 

160

 

Due from related party

 

 

4,465

 

 

(4,465

)

(b)

 

 

Intangible assets, net

 

 

112

 

 

 

 

 

112

 

Deferred income tax asset

 

 

1,885

 

 

(1,367

)

(c)

 

518

 

Other assets

 

 

18

 

 

 

 

 

18

 

Total Assets

 

$

23,781

 

$

(5,638

)

 

$

18,143

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,975

 

$

 

 

$

2,975

 

Accrued compensation and commissions expense

 

 

1,267

 

 

 

 

 

1,267

 

Other accrued expenses

 

 

405

 

 

 

 

 

405

 

Income Tax Payable

 

 

79

 

 

 

 

 

79

 

Total Current Liabilities

 

 

4,726

 

 

 

 

 

4,726

 

Long-term lease liability

 

 

91

 

 

 

 

 

91

 

Total Liabilities

 

 

4,817

 

 

 

 

 

4,817

 

Contingencies (Note N)

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

Common stock, $0.01 par value - 30,000,000 shares authorized;

2,676,469 shares issued and outstanding at September 30, 2022

 

 

 

 

27

 

(d)

 

27

 

Paid-in capital

 

 

 

 

13,299

 

(d)

 

13,299

 

Net investment by LGL Group, Inc.

 

 

18,964

 

 

(18,964

)

(d)

 

 

Total Stockholders' Equity

 

 

18,964

 

 

(5,638

)

 

 

13,326

 

Total Liabilities and Stockholders' Equity

 

$

23,781

 

$

(5,638

)

 

$

18,143

 

 

 

Notes to Unaudited Pro Forma Combined Balance Sheet

 (a)

Represents an adjustment to reflect $1,000,000 of cash balances to be retained by MtronPTI.

 (b)

At the time of the separation, we will no longer have amounts due from related party of $4,465,000. Accordingly, we have removed this amount from the unaudited pro forma combined balance sheet as of September 30, 2022.

 (c)

At the time of separation, LGL will retain the net liabilities associated with the uncertain tax positions related to its various tax filings and certain deferred tax assets relating to tax credits and net operating loss carryforwards. At September 30, 2022, this amount was expected to be $1,367,000, leaving MtronPTI with deferred tax assets of $518,000.

 (d)

Reflects the reclassification of LGL’s net investment in us, which was recorded in net investment by LGL, into paid-in capital and common stock to reflect the assumed issuance of 2,676,469 shares of our common stock with $0.01 par value per share pursuant to the Separation and Distribution Agreement immediately prior to the separation. We have assumed the number of outstanding shares of our common stock based on the number of shares of the Company’s common stock outstanding on September 30, 2022.

About MtronPTI:

M-tron Industries, Inc. trades publicly on the NYSE American under the symbol MPTI. Originally founded in 1965, MtronPTI designs, manufactures and markets highly-engineered, high reliability frequency and spectrum control products and solutions. As an engineering-centric company, MtronPTI provides close support to its customers throughout our products’ entire life cycle, including product design, prototyping, production and subsequent product upgrades. MtronPTI has design and manufacturing facilities in Orlando, Florida and Yankton, South Dakota, a sales office in Hong Kong, and a manufacturing facility in Noida, India.

Forward Looking Statements

This press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, such as those pertaining to the uncertain financial impact of COVID-19 and the Company’s financial condition, results of operations, business strategy and financial needs. All statements other than statements of current or historical fact contained in this press release are forward-looking statements. The words “believe,” “expect,” “anticipate,” “should,” “plan,” “will,” “may,” “could,” “intend,” “estimate,” “predict,” “potential,” “continue” or the negative of these terms and similar expressions, as they relate to MtronPTI, are intended to identify forward-looking statements.

These forward-looking statements are largely based on current expectations and projections about future events and financial trends that may affect the financial condition, results of operations, business strategy and financial needs of the Company. They can be affected by inaccurate assumptions, including the risks, uncertainties and assumptions described in the filings made by MtronPTI with the Securities and Exchange Commission, including those risks set forth under the heading “Risk Factors” in the Information Statement included as Exhibit 99.1 to the Company’s Form 10 Registration Statement as amended and filed with the SEC on August 19, 2022. In light of these risks, uncertainties and assumptions, the forward-looking statements in this press release may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. When you consider these forward-looking statements, you should keep in mind these risk factors and other cautionary statements in this press release.

These forward-looking statements speak only as of the date of this press release. MtronPTI undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements. For these statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Contacts

M-tron Industries, Inc.:


Investor Relations:
James Tivy

[email protected]

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