Welcome to the Sidoti Virtual Small Cap Conference, and thank you for joining us today. I'm Anja Soderstrom, a Senior Equity Analyst here at Sidoti. As I mentioned, next up, we have M-tron Industries, ticker MPTI, and I have with me the CEO, Cameron Pforr, and Linda Biles, the Executive Vice President of Finance. This will be conducted as a presentation followed by Q&A. The presentation will be shared by Linda. It's also accessible on the company's website. If you would like to submit a question, you can do so in the Q&A function at the bottom of your screen. With that, I'm happy to hand it over to you, Cameron. Welcome. Yeah, thank you, Anja, and thank you, everybody, for attending this morning and your interest in the company. Pleasure to speak with you and kind of present the company. For those of you who are new to M-tron, I think we're a very exciting story in the aerospace and defense sector. We've had great performance over the past three or four years, 20% growth year on year, and also very substantial EBITDA returns and cash flow. First, before we get into the presentation, I just want to go over the safe harbor statement. There are obviously inherent risks in investing in any equity. We want to point you to our 10-K that was filed earlier this year, March 27, with the SEC. That'll list the risk factors and just some uncertainties in the business. With that, I'll begin the presentation. Linda, if you want to go to the next slide. Yeah, great. I'm joined by Linda Biles, who's our EVP of Finance, has a tremendous amount of experience with M-tron as well as in the manufacturing sector, and she really runs our accounting and finance team. Thank you, Linda, for joining and helping drive the slides today. Really quickly, M-tron is a pretty unique American story. We're traded on the NYSE American Exchange, formed many years ago by a couple of IEEE fellows, engineers who knew how to do something a little bit better than where they were at, wanted to form their own firms. It started as two different companies that came together in 2004. Since that merger in 2004, we've been very focused on the aerospace and defense markets. Up until that time, we were doing more in the telecom sector, and obviously, those are really good reasons for us to move out of that sector. It's much more of a commodity-driven market. We've really made great headway in the aerospace and defense markets, in space, and also in avionics. We're happy to kind of cover some of that during the presentation. Really quickly, we were spun out of a group called LGL in October of 2022. Spun out at around $13 a share. We've been up to $71, so there is some volatility in our stock just due to the small float. We have 2.9 million shares outstanding as of last quarter. We also have no debt, and we're generating a fair amount of cash flow. We have, importantly, broad employee ownership to kind of align corporate interests with those of shareholders. What I think is unique about us is that we are a U.S.-based manufacturer focused on the defense market and other kind of high-growth niche markets. We're really a specialist in microwave and RF applications. We have a fantastic RF engineering team, and we're vertically integrated. We're one of the few vertically integrated RF companies in the U.S. I think because of that, we're positioned to continue to produce long-term value for shareholders. I think we're now at the substantial size and performance to be a platform through growth, in addition to what we're doing organically, but also through mergers and acquisitions as well as partnerships. Linda, if you can go to the next slide. Really quick, I talked about the vertical integration of what we do. This helps us maintain the quality and the reliability of our processes and also capture more margin. We do a lot of the engineering ourselves, all the design work. We make a number of different components, but then we're also doing the machining and the metals for our enclosures and other things like that, all of our testing, etc., internally, which helps us drive kind of better margins. We also have a blue-chip customer base. Over 70 of our customers have been with us for more than 10 years. We serve the top 10 U.S. defense primes. We serve all of them. We're also involved with a number of innovators in the defense and aerospace industries and avionics space. Lastly, we do have strong market performance. The shares are today in the kind of the mid to high $40s, so about a 4x return on where they entered the market in 2022. Here is a quick snapshot of our team and our board. I joined the company last year in September as CFO. I had been with another public company, but I had run five private companies in kind of high-growth areas, mostly in technology. Three of those companies were very focused on the defense market. Linda has been with us since the early 2000s. She runs our finance group, and she has also a great amount of manufacturing experience, which has been super helpful, and control experience. Bill Drafts, who's going to join me as well for some of these one-on-one calls today, is our President and really our GM of our facility down in Florida and in Yankton and our operations. He comes out of the industry as well, having worked at TriQuint and ICX and FLIR and others. Below the senior management team, we have a very, very dedicated group of managers. Many of them have been at the company for many, many years and bring an amazing amount of knowledge to our clients, really. In terms of the board members, it's a kind of a mix of investor as well as defense specialists. John Mega was one of the founders of L3. Rob Lapenta was at L1 Identity Systems. We have a number of—Belle Lazare runs a power amplifier company that kind of is in the space and includes space as well as defense. We have a number of investors that were from Gabelli Asset Management, who were on the board of LGL when we spun out. They bring either securities law or experience in equity research and things like that. It's this great board, very supportive of what we do. Quickly, in terms of M-tron at a glance and where we compete. As I mentioned before, we're really a provider of robust, highly engineered RF components and solutions. We've been moving more from producing individual components to now also producing subsystems and microwave assemblies or modules. That's the integration of a number of different componentry, really solving kind of more of the problem for our customers. In terms of the types of products we sell, we sell a number of different filters and oscillators. Most of them are built around the use of quartz crystals. That's one of our areas of expertise. We'll also build those into subassemblies, like usually kind of the front ends of radios and things. We'll do crystal resonators and other solutions. In terms of our sales, we did $52 million. Those are trailing LTM sales. The majority of that is filters. The majority of that is the aerospace and defense market. When we say aerospace, we mean military aircraft. We also have a really robust avionics business, which is where we service the commercial aerospace. There we have both Boeing and Airbus as customers. Our components and modules go on, frankly, every airframe that they make for the commercial sectors. Thank you. I think we can go to the next slide. Here are the markets we service. We have tended to focus on areas that demand extremely high reliability and very small kind of tight tolerances. These are areas where your component cannot fail. We do a lot of engineering around the parts for each of our customers. We've been rewarded to date in terms of the margins. I think our margins are quite healthy for the sector. The aerospace, the commercial aerospace market I talked about, we service Boeing and Airbus and also a number of the slightly smaller airframe vendors. Space and SATCOM is roughly 5% of our revenue. It's kind of 5% or 6%. We've been in that market for a number of years, even going back to some of the earlier Apollo missions. We have a very unique testing capability there, which I think most other RF component companies do not have. In terms of what we're doing in the aerospace and defense markets and the military markets, really some of the drivers there are communications and the precision-guided munitions. Those are kind of our two biggest markets. We're also very, very active in radars and electronic warfare and drones. We've been servicing the drone market since 2014. There's been a lot of enhanced communication on the battlefield. This is really supporting our efforts as a company because they require RF componentry. Even in electronic warfare, which has become very prevalent in the war in Ukraine, that requires a lot of RF componentry in addition to sometimes software-defined radios and things. We're very, very active in those spaces. There's also been a lot of redesign, I'd say, in a number of these areas, which is kind of driving our growth. We're going to go to the next slide. This is just a brief slide for you. I think you can read it on our website. I'm not going to go to a lot of detail. As I mentioned, we were founded in 1965. We really changed our focus, moving more towards the defense sector starting in 2004. Right now, we're servicing over 40 programs of record. A program of record is a line item in the defense budget. Those tend to be very long-tail programs. A Patriot missile system or a certain plane like an F-16 would be a line item in the budget. Those programs often run 20 to 30 years in length. That's really the area we're focused on as a client. We want stable customers, customers who demand high reliability, have very, very difficult tolerances to meet, need a highly customized kind of engineered solution. Those are the kind of the niche markets that we're doing very well in. In terms of investment highlights, strong revenue growth and cash generation. We have very attractive end markets with long-term contracts and loyal customers. We have a unique capability to manufacture in the U.S. for mission-critical supply chains, and this has become ever more important. There's been a huge emphasis over the past three years or so in the defense sector to understand the supply chain and to make sure that it's protected, to try to bring on board more of it in the U.S. We've been kind of at the forefront of that. We also have compelling financials with our organic performance, and we're beginning to build an inorganic growth strategy, which I'll talk about in a little bit. We have strong production capacity. We have additional capacity to grow easily and a management team that's capable of supporting that growth. In terms of some of the areas that we're growing in, the number one driver, I'd say, over the past couple of years, and I think also looking forward, is just the armament and weapon system replenishment, kind of driven by global conflicts. We've been growing at 20% year on year for three years. I don't expect 20% growth this year, but we will continue to grow strongly. There's been a lot of questions over the past six months about what would happen if we had peace in Ukraine or the Israeli conflict is resolved with Iran and other competitors in the region. One thing to take into mind is that there's going to be a lot of weapon system replenishment of stockpiles, both in the U.S. and abroad. Also, as the world is recognized as being a very dangerous place, there's been an increase in defense spending with a number of our allies. We hope to be a supplier there as well in a more meaningful way. There's been a lot of modernization of programs and new system development as the battlefield has changed, whether that's through the integration of better data links and communications, the compilation of systems on a missile or a plane. Most of these systems nowadays will have four or five different areas that we would supply. It could be communications, it could be guidance systems, it could be radar, it could be EW systems, but they'll all be on a platform. We are seeing also strengthening of the backlog for avionics. I think that's really an outgrowth of Airbus and Boeing kind of getting back on their feet after COVID and Boeing working through its labor issues and kind of returning to production. Last quarter, that was one of the areas of growth in our backlog. We continue to expand in rapidly growing markets and want to make sure that we're addressing those markets. The R&D process that we have internally is generating a lot of interest in our product. We always want to be at the forefront of doing things unique. This past year, we've had a product that does internal compensation of an oscillator. It's for, and that's been really well received. We have other inventions like that and advancements that are kind of driving the interest in the company and orders from the company. Really quickly, just in terms of TAM, we have plenty of room to grow. The electronic components market is quite large. It's measured in billions. If you think about just the defense electronics market, it's also very, very large. The part that we service, you know, I don't think we're more than 5% market share. We are unencumbered, I'd say, by the size of the market. It's really more a matter of us executing well and performing well against competitors. It is a very fragmented market. The defense industrial base is over 6,000 companies in the U.S. A lot of them are relatively small. There are some larger ones, but in general, we don't compete against a large company across their product line. They might have a small division which does military sales or does filters or oscillators, but we're not competing against any kind of billion-dollar companies head to head. We do have a unique product portfolio. We do most of our filter work in Florida and oscillator work in South Dakota. We also have a facility in India, which helps with assembly of this, and it's licensed under ITAR. We have a number of unique products that we developed. I think also there are very few companies that have the breadth of products that we have. We focus on both filters and oscillators, but a number of different types of each. We're always looking to add to that portfolio, whether that's through internal development or partnership or potentially acquisition. Quickly on the footprint of the company, we are global, but we are U.S.-focused and based. We have a sales office in Hong Kong. We have a manufacturing facility in New Delhi and a trade zone outside of New Delhi. That's ITAR licensed for manufacture. Our primary production facilities are in Orlando, Florida, and Yankton, South Dakota. In both those facilities, we have plenty of room for growth. We would need to bring on board, if we were to expand significantly, new labor resources. From a CapEx perspective, we have the equipment and the lines capable of producing quite a bit more than we produce today. In terms of the customer base, very, very strong customer base and also very broad. You'll see here some of the names that we serve in the aerospace and defense markets. We serve both U.S. and international companies. We have a number of European primes that we service, including BAE and Thales and others. We do have sales teams overseas, but we primarily interact with these companies in the U.S. and their U.S. divisions. On the avionics side, we do a lot of work with Collins and Leonardo and others. Ultimately, the customer there are the Boeings and Embraers and Airbuses. That's kind of more of an indicator of that market growth. On space, we have a broad list of customers as well. Lastly, the last market I mentioned is industrials, which is a little bit of a catch-all. There, we're primarily serving either the test and measurement, the telecom, or the oil and gas markets, where we do some sensor work for downhole drilling and things like that. These are smaller markets for us and a little bit less an area of focus. We do have some unique capabilities there, which lead to some good customer engagement. I did put in here just an example of the drone market in terms of the integration of different types of technologies in these different platforms. In the drone, this is a drone example of a reconnaissance or drone. It looks like a Reaper, essentially, but it has a missile on it, so it has a kinetic capability. In these types of situations, we would be in a ground station. We would also be in the satellite for the communications to the actual drone, and so that command capability. Usually, these drones, especially ones that are larger, more significant in cost, have a radar on board to protect from other kinds of kamikaze drones or anti-drone capabilities. They'll also have guidance systems to help identify and target ground targets. These are all areas where we can play. Lastly, EW is also another area that's really robust. It's growing quite a bit, and we'll play there as well. This is just one example. We have a good deck on our website. It's from our investor day. It was done in June. If you look on that presentation, you'll see kind of a breakout like this of the different ways we play in these different markets, just to give you kind of a little bit deeper feel about how we do what we do. I want to wrap up quickly so you have some time for questions. In terms of the growth strategy, we've been very focused on building out our ability to penetrate these programs for record. We're on over 40 now. That gives us tremendous stability, also a lot of diversification of revenue. These programs last for 20 to 30 years. They'll often be sole sourced, although about half the time they're sole sourced, half the time we're one of two vendors. We want to leverage those customer bases to get into more program business. Often a program manager or a solutions architect will interact with their colleagues internally at a large prime and recommend us for additional types of work. We do a lot of market-driven R&D, and this has helped us continue to penetrate as well as to move up market and to build more modules and subsystems. Lastly, we are accumulating cash. We are looking for complementary acquisitions, and we're using a disciplined approach there to approach a number of people in the market and really try to identify something that we can close in the next six months. Here quickly are some financial metrics just updated through Q2. This is providing you a relative performance from the spin-off that was done in October 2022. The revenue has grown quite a bit quarter to quarter. We're at like $13.5 million roughly per quarter at this point in time. Two years ago, we were doing about $8 million per quarter. The margins have also increased significantly. The gross margin has moved from the mid-30% to the mid-40%. From a net income perspective, we're producing about 2x what we were per quarter in the past. We're now at just around the 20% EBITDA margin. The last four months have been at 18%. I think we're trying to target somewhere in the 20% to 21% long term. We're generating a tremendous amount of cash. At this point, we have $15.5 million of cash on the balance sheet. We expect to end the year strongly in the $19 million to $20 million cash range. Our EPS has moved up significantly since our spin-out two years ago. Part of the reason our margins have improved is a lot of process improvements internally. It also has to do with just our ASP moving up over that same time frame. The average ASP has moved from around $73 a component to over $103. We have a broad range of products that we produce and solutions we produce, some costing in the tens of thousands of dollars, others in this smaller range. One thing that's really important for us as a management team is to make sure that we're continuing to innovate. We're continuing to build our revenue through new products. We do measure that, and about 30% of our revenue comes from products developed over the past three to four years. We want to continue that performance just to make sure that we're continually staying on the cutting edge and we're getting into new programs that have good life expectancy ahead of them. Here's a financial summary. We did release our second quarter numbers about a month ago. You can see the far right, that's the last six months of performance. About 14% year-on-year revenue growth for the first half of the year. Gross profits in the mid-40s, it was 43% for the first half of the year. EBITDA margin was around 19%. What's really significant is the same period we've really grown our backlog. If you look at the backlog at the end of the first half in 2024, it was around $45 million. We're now at $61 million. That's really due to significant growth in our orders for aerospace and defense. Last quarter, we had a lot of avionics and space orders that also grew the backlog during Q2 of this past year. The last couple of slides are really on what we are doing inorganically. On the M&A front, this is part of an effort to enhance our organic growth and to expand our business and looking for complementary solutions. We're looking for other solution vendors or component vendors who service our markets or who bring significant expertise and a strong footprint in new markets that we want to get into. We're trying to do this to scale quicker. We're looking at doing accretive acquisitions and expand our technology expertise. It's always a battle to find great engineers. We're always trying to find engineers who bring us into either new types of products or new markets. Some of the target characteristics are unique assembly and design capabilities, access to key customers and programs, and strong engineering that brings unique expertise to us. We're not really looking for industry consolidation so much as really complementary and broadening acquisitions. We're often asked about what's our long-term model. I look at long term as what can we do three to five years out. We'd really like to be able to grow reliably at least 10% a year with gross margins in the mid-40s, I think is realistic, so kind of 43% to 46%. We'd like to get to a consistent EBITDA margin of 20%, 21%, something like that. Not that we're hitting every metric right now. We're not, but we want to be able to do this consistently, be able to forecast it very effectively. We're building the company's infrastructure to kind of get us there. This all produces basically a very kind of high cash generative model, which we find attractive in the space. We are not looking to do dividends in the short term, but we're looking to use our cash for acquisitions. I think that that's probably a more likely use of proceeds. We do do some CapEx every year as well. We invest about 3% to 4% of revenue in CapEx. We've had some really significant wins this past year just in terms of the type of automation we're doing and types of improvements we're doing to our lines just to make our processes more efficient. With that, I'll open it up to questions, but I appreciate your interest and look forward to speaking with you. Thank you, Cameron. That was a nice overview. We have a lot of questions in the Q&A already. If you have a question, you can submit it in the Q&A function at the bottom of your screen. We'll try to get to them during the few minutes we have left. I'll start off here. In which part of the defense sector do you expect the biggest growth opportunities in the next two to three years? Yeah, I'd say what we've been growing, our largest sector is communications. The second largest for us is precision-guided munitions. That has been an area that has grown tremendously over the past three years. It's kind of doubled our revenue year on year. As we look forward, electronic warfare and radar are big areas for near-term growth. There are a number of different initiatives to double or triple the U.S. capacity to produce more precision-guided munitions. While we haven't seen a huge uptick in our orders in that space, I do think that's something we'll see. Raytheon and Lockheed have made some press releases around that in those markets. OK, thank you. Can you explain the current impact of the U.S. tariffs on India on your margins? Right. The India tariffs are relatively new in terms of their size. We're hoping that gets resolved. We do a lot of production in India, not finalization of products, but we are looking to mitigate the tariff. It's basically we're getting tariffed on the value add or the labor content in India. It could be $500,000 to $1 million. We're looking at ways to reduce that, but that's the potential there. We'll see what happens. It's kind of early days there. OK, another question here. Could you explain your plans with a connectivity partnership? How much do you want to invest, and what is the timing? Right. That's an area where we as a company are not spending a lot of time driving that. We've offered to kind of support that effort, both through our expertise in the RF sector and our reach, but also potentially some capital for the GP. They are continuing to look at opportunities in the sector, but we haven't made a cash commitment or made a big time commitment to date. OK, thank you. Also, another question here. Can you explain the main factors behind the rise in the SG&A costs in the first half of 2025? Will this reverse partly in the second half? Yeah, it was really driven by a couple of things. One is the commissions went up because our sales have continued to increase. We had a lot of stock comp expenses that came through that sector, and our bonus and our stock comp gets flushed through the SG&A. In the other area, we've added a little bit to engineering in terms of headcount. We've also been doing some more marketing and just improvement of our website and things like that, which kind of run through that sector. OK, thank you. What percentage of sales are sole sourced? About half of our A&D projects are sole sourced, yeah, so roughly. OK, and then another question here. What are the financial characteristics of potential acquisition targets, and how much would you spend? Yeah, we are trying to find companies in the $10 million to $20 million revenue range. What we're really keen on doing is making sure that they're cash producing, they have good margin structure, and they're going to add to our EPS. We're looking for accretive deals. What we're finding is that there are not a lot of companies in that size range. There are many more companies in the $5 million to $10 million revenue range. We are very focused on finding companies that are producing at least a couple million of EBITDA just to make sure that's a significant addition to EPS growth and worth the expense of the transaction. OK, and I'm going to squeeze in one last question here. Can you discuss more in depth the scalability of the manufacturing plants in Orlando, South Dakota, to meet increased demand without tapping into capital reserves? Yeah, I'd be happy to. In Yankton and in Florida, we've got production facilities that at one point produced more than we're doing now. We have the capability to run three shifts. We also have some room for expansion if we needed to add new capabilities or new lines. We could significantly increase our revenue through the additional labor to run a full second shift or a full third shift if needed. Right now, we're doing one full shift, and we have a skeleton crew on the second shift, so just 10 or 11 people. There's quite a bit of capacity there that can be added. I know you, along with everyone else, had some hard time finding labor a couple of years ago. How is that in the current conditions? Yeah, that's definitely improved. We have something called touch labor, which really is doing soldering and other types of techniques to build our modules and our components. There, we really have partnered with a number of schools in the area. We do a lot of internal training. We've created our own pipeline there. We're also looking for mechanical engineers and machinists and things like that. That's continual recruitment, but we have a decent pipeline in that area. The other area that we are always looking for are really talented RF engineers. There as well, we're willing to take great college grads and train them in our field. We've gotten creative, and we've actually mitigated a lot of our labor issues through that. OK, thank you. We're actually out of time. We're over time. I'm going to thank you, Cameron, and Linda and M-tron for participating today and everyone who joined in in the Q&A and everything. I know we didn't go over all the questions, and I know you have a pretty packed one-on-one schedule. If anyone wants to follow up with the management team, you can reach out to us at Sidoti or to the company directly. I'm sure they will make sure you get a meeting with them and discuss more in depth the M-tron story. With that, I'll hand it over to you, Cameron, for some closing remarks. Thank you, Anja. I really appreciate the venue and your support of the company and Sidoti's support of what we do. This is a great opportunity for us to interact with investors. We do have a full day today and tomorrow of one-on-ones. If you email ir@mtron.com, we'll try to follow up with you at another date. If you can just be a little bit patient, we've had a lot of interest in the company as of late and are a little bit backed up in terms of the one-on-one engagement. Thank you again and appreciate everybody's interest today. Thank you. Thank you, everyone.