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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221114005965/en/
M-tron Industries, Inc.: Investor Relations: James
Tivy ir@mtronpti.com
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