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    MPTI
    Earnings call· Jun 2026(Q2 FY26)

    M-tron Industries Q2 FY26 earnings call MPTI

    Aug 13, 2026 Source

    Executive summary

    M-tron Q2 FY26 — Strong Sales, Earnings, and Backlog Growth Driven by Defense and Space

    M-tron delivered a strong second quarter, marked by robust revenue and Adjusted EBITDA growth, primarily fueled by aerospace, defense, and space orders, leading to a significant increase in backlog. The company is actively investing in manufacturing capacity and pursuing strategic M&A, while navigating temporary gross margin pressures from new program ramps and non-cash stock compensation.

    Highlights

    5

    • Total revenues for Q2 FY26 were $15.1 million, a 13.8% increase over the same period last year, driven by aerospace and defense.

    • Adjusted EBITDA increased 41.7% to $3.4 million in Q2 FY26 compared to $2.4 million in Q2 FY25.

    • Backlog increased 37.2% to $84 million as of June 30, 2026, reflecting broad demand and strong book-to-bill ratios for three consecutive quarters.

    • Net income increased to $1.9 million in Q2 FY26 from $1.6 million in Q2 FY25, despite significant non-cash stock compensation.

    • Secured $12 million in new orders for 2026 and 2027 production for recently introduced products.

    Concerns

    3

    • Gross margins decreased to 41.2% in Q2 FY26 from 43.6% in Q2 FY25, impacted by $0.5 million in non-cash stock-based compensation and tariffs.

    • Diluted EPS decreased to $0.43 in Q2 FY26 from $0.53 in Q2 FY25 due to increased weighted shares outstanding from a rights offering.

    • Gross margins are expected to initially decrease slightly in H2 FY26 to a 41.5%-43.5% range as new programs ramp up.

    Guidance & targets

    5
    CategoryTargetConfidence
    Gross Margins
    41.5% to 43.5% range, maybe 44%
    high materiality
    Medium
    Gross Margins
    slightly better
    high materiality
    Medium
    Revenue Growth Rate
    slightly accelerated rate
    high materiality
    High
    Revenue Impact from Strategic Reshuffling
    more significant impact
    high materiality
    High
    New Program Purchase Orders
    first purchase orders
    medium materiality
    High

    Operational metrics

    4
    Non-cash stock compensation expense
    $1.0 million
    Q2 FY26

    The net income figure includes a $1.0 million non-cash stock compensation expense directly related to the accelerated vesting of stock-based 2025 annual bonus.

    Adjusted EBITDA
    $3.4 millionup 41.7% YoY from $2.4 million
    Q2 FY26

    Adjusted EBITDA was $3.4 million for the 3 months ended June 30, 2026, compared with $2.4 million for the 3 months ended June 30, 2025. This 41.7% increase was primarily due to higher revenues, partially offset by an increase in engineering, selling, and administrative expense, which grew at a slower rate than revenue.

    Tariff impact on gross margins
    1.1%vs 1.25% in Q2 FY25
    Q2 FY26

    We saw a 1.1% impact on gross margins this past quarter compared to 1.25% a year ago in Q2 2025.

    New orders for new products
    $12 millionvs approximately $200,000 in 2025
    Past 2 quarters

    This past 2 quarters, for example, we've received $12 million in new orders for '26 and '27 production for products that we just introduced to the market a year ago and sold approximately $200,000 of in 2025.

    Industry KPIs

    9
    MetricValueDetails
    Orders book to billwell above one
    Long term agreements—
    Segment revenue growth—
    Content per device per vehicle—
    Design wins product cycle ramps$12 millionUSD
    Order visibility backlog policy—
    Capacity expansion internal sourcing—
    End market revenue mix organic growth—
    Operating margin incremental leverage—

    Orderbook & backlog

    1
    Backlog$84 millionJune 30, 2026

    up 37.2% YoY from $61.2 million

    Considerable backlog for the next two quarters, exceeding current production capacity. More than half of next year's production already in backlog, extending through 2028.

    Deals & partnerships

    2
    Skyline Instruments CorporationInvestment in an innovative dual-use synchronization and timing systems company.

    Skyline is making significant advancements critical for the synchronization of RF sensor data and operations in GPS-denied or fragile environments. Part of M-tron's effort to innovate and learn about future market opportunities in national defense.

    Various potential targetsActively pursuing M&A opportunities to add to product portfolio and engineering talent pool.

    Since we completed the rights offering, we've had, kind of, an increase in deal flow. We now have more banks actively engaged in giving us ideas... We still hope to get a deal done this year.

    Capital programs

    1
    Manufacturing Capacity and Scalability Investmentsunderway
    Funding: rights offering funds
    Start: earlier this year

    Benefit: increased production capacity and scalability

    We're very focused on increasing our manufacturing capacity and scalability, and we've made a number of investments and accelerated our investments earlier this year just to meet the needs for our customers. Some of that rights offering money utilized for increased production.

    Risks & headwinds

    3
    Gross margins initially decreasing due to rapid expansion and new program ramps.H2 FY26

    probably were going to see gross margins in the back half of the year, somewhere in the maybe 41.5% to 43.5% range, maybe 44%, but certainly not any higher than that.

    Mitigation: making investments to try to automate that production and to improve the margins there. We're making good progress.

    Continued impact of tariffs on gross margins.ongoing

    1.1% impact on gross margins this past quarter compared to 1.25% a year ago in Q2 2025.

    Mitigation: reduced slightly this year after the Supreme Court ruling.

    Decrease in earnings per share due to increased weighted shares outstanding.Q2 FY26

    EPS decreased to $0.43 per diluted share for Q2 FY26 compared with $0.53 per diluted share for Q2 FY25.

    Mitigation: related to our rights offering that was completed in April of 2026

    What to watch in Q3 FY26

    4

    Gross Margin Trajectory

    Next quarter (Q3 FY26) and FY27
    Current41.2% in Q2 FY26; guided to 41.5%-43.5% for H2 FY26
    TargetStabilization or improvement towards the higher end of the guided range, or "slightly better" in FY27

    Why it matters

    Gross margin pressure from new program ramps is a key concern; verification of management's ability to automate and improve efficiency will impact profitability.

    I think realistically, we're probably in the middle of that range [41.5% to 43.5%]. I do think that the margins will be slightly better next year.

    Q&A highlights

    6

    Inquiring about the company's M&A strategy following the rights offering and increased cash balance.

    Cameron Pforr stated that deal flow has increased since the rights offering, with more banks providing ideas. They hope to complete a deal this year and are formalizing the process by hiring for a corporate development team.

    “We still hope to get a deal done this year. We're also starting to hire for our corporate development team. So, trying to make that a more formal process and a better resource in the company.”

    asked by John Bair · answered by Cameron Pforr

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 FY26 Financial Highlights

    M-tron reported total revenues of $15.1 million for Q2 FY26, a 13.8% increase over $13.3 million in Q2 FY25, driven by strong aerospace and defense program shipments, particularly in avionics and space. Adjusted EBITDA grew 41.7% to $3.4 million from $2.4 million year-over-year, despite gross margins decreasing to 41.2% from 43.6% due to non-cash stock compensation and tariffs.

    02

    Backlog and Book-to-Bill Strength

    The company's backlog surged 37.2% to $84 million as of June 30, 2026, up from $61.2 million a year prior. This growth reflects broad demand, including large aerospace and defense program orders, new solutions for counter-drone and electronic warfare, and increased space industry orders. M-tron has achieved very strong book-to-bill ratios for three consecutive quarters, with considerable backlog extending through 2028.

    03

    Strategic Investments and Capacity Expansion

    M-tron is making significant investments in R&D, new equipment, and automation to scale production and meet unprecedented🌐 demand. The company has received $12 million in new orders for 2026 and 2027 production for products introduced just a year ago. Management is focused on increasing manufacturing capacity and scalability, utilizing funds from the recent rights offering.

    04

    Defense Market Opportunities

    M-tron is increasingly moving into program business, which now constitutes the majority of its aerospace and defense revenues. The company is engaged with defense primes on long-term supply agreements for missile systems, with first purchase orders from these agreements expected in Q1 FY27 for 2028 production. Demand for aerospace and defense products is expected to increase over the next several years, with M-tron anticipating accelerated growth through 2026 and 2027.

    05

    M&A and Innovation

    Following a rights offering that bolstered its cash balance, M-tron is actively pursuing M&A opportunities to expand its product portfolio and engineering talent, aiming to complete a deal this year. The company also made a strategic investment in Skyline Instruments Corporation, an innovative dual-use synchronization and timing systems company, to explore future market opportunities in GPS-denied environments.

    06

    Gross Margin Dynamics

    While gross margins are expected to initially decrease slightly in the second half of FY26, likely in the 41.5% to 43.5% range, as new programs ramp up, overall earnings are projected to increase due to revenue growing faster than operating expenses. Management expects margins to be "slightly better" in FY27 as production becomes more efficient and automation efforts mature.

    AI-generated summary of the company’s earnings call. Not investment advice.