Executive Summary

Q1 2025 delivered double-digit top-line growth, but margins compressed and EPS missed consensus: revenue $12.73M (+13.8% YoY), gross margin 42.5% (-470 bps vs Q4), diluted EPS $0.56 vs S&P Global consensus $0.66; adjusted EBITDA $2.50M *.
Backlog surged to $55.5M (+20.3% YoY; +$8.3M QoQ), supported by several large defense and avionics orders; management highlighted strong bookings and a robust pipeline, including drones in 2H25 .
New program ramps (space products, EW/RADAR oscillators) and initial tariff impacts (<$0.1M in March) weighed on margins; management expects yields and margins to improve as mix normalizes (missile programs resume shipments) .
Corporate actions: warrant dividend distributed April 25 (5-for-1 warrants, $47.50 strike, early exercise trigger at $52 VWAP), a potential sentiment and liquidity catalyst; company to host investor presentation and Annual Meeting on June 10, 2025 .

What Went Well and What Went Wrong

What Went Well

Revenue growth and backlog strength: revenue up 13.8% YoY to $12.7M, backlog up 20.3% YoY to $55.5M, reflecting large defense/avionics orders and broad demand .
Strategic progress and market positioning: “We are involved… in over 40 programs of record,” underscoring embedded defense exposure and program-centric model .
Avionics recovery signs and operations initiatives: management saw growth in commercial avionics and is deploying greater factory-floor automation to improve yields .

What Went Wrong

Margin compression: gross margin fell to 42.5% from 47.2% in Q4 and 42.7% YoY, driven by new-product inefficiencies, product mix (lower shipments on two high-margin missile programs), and initial tariffs .
EPS and revenue below S&P Global consensus: EPS $0.56 vs $0.66 and revenue $12.73M vs $13.00M, reflecting mix/tariff headwinds and ramp dynamics *.
Cost pressure: higher engineering, selling and administrative expenses tied to R&D investments, commissions, and scaling corporate functions with growth .

Financial Results

Core Financials vs Prior Year, Prior Quarter, and Consensus

Metric	Q1 2024	Q4 2024	Q1 2025 Actual	Q1 2025 Consensus
Revenue ($USD Millions)	$11.19	$12.81	$12.73	$13.00*
Diluted EPS ($USD)	$0.53	$0.73	$0.56	$0.66*
Gross Margin (%)	42.7%	47.2%	42.5%	N/A
Adjusted EBITDA ($USD Millions)	$2.26	$3.06	$2.50	N/A
Adjusted EBITDA Margin (%)	20.2%	23.9%	19.7%	N/A

Notes: Adjusted EBITDA excludes interest, depreciation, amortization, and stock-based compensation (Reg G reconciliation provided) . Values with asterisks retrieved from S&P Global.

KPIs

KPI	Mar 31, 2024	Dec 31, 2024	Mar 31, 2025
Backlog ($USD Millions)	$46.1	$47.2	$55.5
Cash & Cash Equivalents ($USD Millions)	N/A	$12.64	$13.66

Guidance Changes

No formal quantitative FY 2025 guidance was issued in Q1. Management expects margins to improve as yields rise and high-margin missile program shipments resume; tariff pass-through exists contractually but near-term industry application may be uneven .

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY 2025	Not provided	Not provided	Maintained (N/A)
Gross Margin	FY 2025	Not provided	Improvement expected from yields/mix	Qualitative (Improve)
OpEx (ES&A)	FY 2025	Not provided	Continued R&D investment and commissions with growth	Qualitative (Higher with growth)
Tariff impact	FY 2025	Not provided	Initial <$0.1M March; pursuing FAR exemptions and pass-throughs	Emerging headwind, mitigations underway

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024 and Q4 2024)	Current Period (Q1 2025)	Trend
Defense program mix	Strong defense-driven shipments; raised FY24 outlook and exceeded expectations	Defense orders drove growth; fewer shipments on two high-margin missile programs in Q1 (to resume)	Improving mix expected
Avionics/commercial aircraft	Avionics grew slightly in FY24; broader recovery anticipated	Growth observed; Boeing labor resolution seen as positive, expecting airframe orders pickup	Gradual recovery
Margins/operations	FY24 gross margin reached records; efficiencies and product mix tailwinds	Margins dipped on new-product ramps and mix; automation initiatives to lift yields	Near-term pressure, medium-term improvement
Tariffs/macro	No tariff commentary in Q3/Q4 releases	Initial tariff costs (<$100k in March); FAR exemptions and pass-through clauses pursued	Emerging headwind with mitigations
Backlog/bookings	Backlog varied with timing of large program orders	Backlog up to $55.5M; two strong quarters of bookings; large drone programs targeted in 2H25	Strengthening
M&A/partnerships	Strategic initiatives highlighted in FY24	Ramp-up of complementary acquisitions/partnerships in RF components/subsystems	Increasing strategic activity

Management Commentary

“We are involved… in over 40 programs of record,” reflecting embedded exposure across defense programs and a program-centric revenue base .
“Gross margins were impacted by… product mix… new space products… a new type of oscillator used in EW and RADAR… I do expect the yields to improve and the margins to improve throughout the year” .
“We had a little bit less than $100,000 of tariff charges in March… we do have in our contracts the ability to pass on taxes and tariffs… there will be some disruption in the industry in terms of cost for the short term” .
“Backlog was $55.5 million… reflects several large defense and avionics orders received during the quarter” .
Warrant dividend terms: 5 warrants per 1 share; $47.50 strike; early exercise trigger at $52 VWAP for 30 days; expiry by April 25, 2028 or 30 days post trigger announcement .

Q&A Highlights

Margin trajectory: Near-term compression from mix and initial runs; margins expected to improve as missile program shipments normalize and yields rise on new space/EW-RADAR products .
Tariff impact and pass-through: <$0.1M in March; pass-through clauses exist, but near-term industry application is uneven; FAR exemptions being pursued for defense materials .
Pipeline visibility: Two strong quarters of bookings; expected announcements across missile programs and avionics; significant drone programs targeted in back half of 2025 .

Estimates Context

Q1 2025 EPS and revenue came in below S&P Global consensus: EPS $0.56 vs $0.66; revenue $12.73M vs $13.00M; coverage is limited (# of estimates: 1) *.
Given margin headwinds from mix, new-product ramps, and early tariffs, Street models may need to temper near-term gross margin and EPS while preserving medium-term improvement assumptions as yields normalize and mix shifts back to high-margin missile programs .
Note: Values retrieved from S&P Global.

Key Takeaways for Investors

Near-term: Expect margin volatility as new programs ramp and tariffs work through contracts; stock may react to headline EPS/margin miss despite backlog strength—watch for Q2 mix normalization as a positive catalyst .
Medium-term: Backlog and bookings point to sustained revenue growth; yields and margins should improve as new products mature and high-margin missile shipments resume .
Tariffs: Initial costs were modest; FAR exemptions and contract pass-throughs provide mitigation, but timing/application uncertainty remains a watch item .
Corporate actions: Warrant dividend introduces potential incremental liquidity/interest; investor day/Annual Meeting on June 10 offers an update on strategy, bookings, and margin trajectory .
Focus areas for modeling: Mix (missile vs new space/EW oscillators), tariff pass-through timing, R&D/ES&A scaling with growth, and automation-driven yield improvements .
Execution risk: Acquisition/partnership ramp adds strategic upside but also integration demands; management indicates disciplined pursuit of accretive deals in RF components/subsystems .

M-tron Industries, Inc. (MPTI)·Q1 2025 Earnings Summary