M-tron Industries, Inc.

speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And to withdraw your questions, simply press star one again. Thank you. I would now like to turn the call over to Linda Biles, EVP of Finance. Please go ahead.

Good morning, everyone. Thank you for joining our 2025 Amtron Q2 earnings call. Please note this call will be recorded and we will make the recording available on our website, www.mtron.com shortly after the call. Yesterday afternoon, we released our earnings for the second fiscal quarter of 2025. Before getting underway, we are required to advise you that the following discussion should be taken in conjunction with our most recent financial statements and notes as contained within our 2024 10K, which was filed on March 27th, 2025 with the SEC. This discussion may contain forward-looking statements within the meaning of 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements contain known and unknown risks and uncertainties which are detailed in our SEC filings. Although the company believes that the forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, There are no assurances that the company's actual results will not differ materially from any result expressed or implied by the company's forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statement, whether it's the result of new information, future events, or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. With that, I will now turn the call over to our interim CEO, Cameron Foer.

Thank you, Linda. And good morning, everyone. And thank you for attending our second quarter FY 2025 earnings call and your interest in the company. We are pleased to discuss our strong first half results for the fiscal year 25 and our outlook going forward. As a reminder, Emtron designs and manufactures highly engineered RF solutions. including electronic components and subsystems used to control the frequency and timing of signals and electronic circuits. We're a global company with three manufacturing sites, two of those in the United States and one in India. Company's primary markets include aerospace and defense, commercial avionics, industrials, and space. So we're pleased to report that the company continues to perform well with continued strength in Imtron Q2's sales, and also growth in our backlog. Our revenues continue to be driven by defense-related orders, and we saw growth in the backlog over the quarter, driven by avionics and space orders. We also have had now three-quarters in a row of very strong book-to-bill ratio. With consistent operating performance, we've been able to continue to make strategic investments in research and development and continue to increase the profile of the company and prime the pump for future growth. Yesterday, we reported the following Q2 fiscal year 2025 results. Total revenues for the quarter were $13.28 million, a 12.5% increase over the prior year period, $11.2 million of revenue. The revenue increased in the period primarily due to strong defense program product and solution shipments. Gross margins for the second quarter of 2025 were 43.6%, a decrease from the 47% gross margin we experienced in Q2 of 2024. The decrease is primarily due to product mix and the first full quarter of federal tariffs on imports of foreign sourced and partially finished goods. Net income was 1.6 million or 53 cents per diluted share for the three months ending June 30th, 2025. As compared to 1.7 million, or 63 cents per share, or diluted share, for the three months ended June 30, 2024. The decrease was primarily due to lower gross margins discussed above, as well as higher engineering, selling, and administrative expenses, and then increased investment in research and development, higher sales commissions due to our increase in revenue, and then increased administrative and corporate expenses consistent with the overall growth in the business. Adjusted EBITDA was $2.4 million for the three months ended June 30, 2025, compared to $2.5 for the three months ended June 30, 2024. The decrease was primarily due to reduced gross margins, as well as an increase in engineering, selling, and administrative expenses consistent with their growth. Backlog increased 35% or $15.9 million to $61.2 million as of the end of June 30, 2025. compared to where it was at $45.3 million at the end of June 2024 and $47.2 million at the end of the fiscal year 2024. The increase in backlog reflects continued broad demand for our products, including several large defense and avionics orders received during the quarter and an increase in space industry orders. Q2 fiscal year 25 was the first full quarter Imtron was impacted by the recently announced federal tariffs on the import of goods and materials from outside the United States. While Imtron is a US-based manufacturer, we do import some materials from Japan, China, Korea, and Europe and perform some finishing work in our India facility. It's difficult to predict the long-term impact of this trade policy on our financial performance as it changes regularly in some of the countries with which we received materials and partially finished goods from do not have new trade agreements in place with the U.S. government. Encouragingly, though, to date, we have seen no impact from tariffs on demands for our products. Also of note, on April 25th, 2025, the company distributed a dividend of warrants to stockholders of record for March 10th, 2025. The warrants are listed on the NYSE American Exchange under the ticker NPTIWS and are tradable Just as a reminder, five warrants are exercisable to purchase one common share. The strike price is $47.50 per share, and there is an early conversion provision as well as an oversubscription feature. Further information on the warrants is available in a FAQ found on our Intron Investor Relations website at ir.intron.com. We continue to execute our strategy of continuing moving into more program business. which now makes up the vast majority of our aerospace and defense revenues. We are involved in over 40 programs to record, and on many of these programs we are a sole source provider, and we stand to reap many benefits if defense spending in the areas we support continue to grow. IMTRAN plays a critical role in the defense of our nation by providing U.S. source and highly engineered components for many U.S. and allied military programs. Having U.S.-based advanced manufacturing capabilities support our joint forces is more important than ever, and we thank our employees for their dedication to their jobs and our mission. We also thank our dedicated customers for their continued business and the trust they place in Intron and our people. So before I open the floor to questions, I wanted to mention that we will be presenting at two conferences in September of this year. We're presenting at the HC Wainwright Conference in early September and the Sidoti Small Cap Conference later in the same month. Information for both of these events will be posted on our investor website. Operator, can you please open the lines and allow the first question?