Hello, everyone. Good morning and welcome to the virtual portion of the 27th Annual Needham Growth Conference. My name is Chris Grenga. I'm a research associate in the Advanced Industrial Technologies team here at Needham. We are pleased to have Mtron with us here today. Mtron is a designer and manufacturer of highly engineered, high-reliability frequency and spectrum control products and solutions. The company is headquartered in Orlando, Florida. Presenting from the company today are Marc Gabelli, Director, and Cameron Pforr, CFO. Thank you for joining us, Marc and Cameron. Marc and Cameron are going to present an overview of the business, and then, time permitting, we will open it up for Q&A. You can submit your questions through the portal, and I will be happy to relay them to management. Without further ado, Cameron, Marc, take it away.
Thank you.
Thank you, Chris, and thank you, Needham & Company, for our invitation and participation here in this event. I'm Marc Gabelli, and as Chris said, I'm joined by Cameron Pforr, our Chief Financial Officer. I'm delighted to be here. Mtron PTI, otherwise Mtron Industries, traded on the New York Stock Exchange under the symbol MPTI, is a company that we took public about two years ago, and we play in the niche, highly tailored electronics space oriented towards the Department of Defense and related businesses. If we can now turn the slide to, our Safe Harbor, I advise you to please read our Safe Harbor statement and note further that any investor or potential investor should ensure they have read the risk outlined under risk factors, both here and available on the company's website and contained within our 10-K filed with the SEC on a regular basis. Next slide.
So Mtron Industries, symbol MPTI, it's actually a company that dates back to 1965. I, as the longtime Chairman, invested in Mtron Industries and took a stake via its parent company, LGL Group, back in 2003 when I financed the acquisition of PTI Group based in Orlando, Florida. Mtron Industries purchased PTI Group now. It's about 20 years ago. At that time, Mtron had a diversified business mix, but it was not oriented towards the Department of Defense work, and PTI Group improved and helped refocus some of where we are today. Over the years, we've invested in the business, we've made several acquisitions, and we've tailored the product range and the customer orientation so that today we're a business very much focused on the aerospace and defense sectors with manufacturing capabilities in the United States through ITAR-approved facilities.
We listed, as I mentioned earlier, in 2022 via the spinoff from LGL Group. At the time, we were just shy of $13 a share, and 2024 saw the share price reach a high of $71. Shares have since abated, but we continue to deliver on the fundamentals and the overall operating premise that we promised shareholders at the point of divestiture, spinoff, or IPO, as you may. Today, we have 2.8 million shares, 2.86 as of our last filing. That's an increase since our spin, and the main driver of that increase was what we believed a very important alignment mechanism where we distributed, granted, 183,000 options, which are in the money and exercisable, to our professional staff.
And in fact, the alignment mechanism was so that those with tenure, from the janitor to our bookkeepers, but also super important, the shop floor workers, we have many that have been with us over 20 years, got more shares than anyone new in the company, regardless of their rank. And we're very delighted that many of them have exercised those options, but they're all in the money. So we've counted them in the overall share count of 2.86 million. The company has no debt. It's generating significant free cash flow, which we continue to drive and build while we still invest in both R&D and CapEx, where we're upgrading our plant property and equipment on an ongoing and regular basis.
We're now a unique, pure-play, defense-oriented contractor with a strong balance sheet, which is growing and improving, and we play in very important niche areas of the defense market. Mtron's products are known as specialist robust engineered microwave and radio frequency applications for customers, a broad range of customers, which are really the major OEMs and their subs in the United States. We're going to talk about that in a minute. This company itself and our involvement has an excellent and strong board of directors, which include founders of L3 Communications. Bel Lazar, our current Chairman, I'm proud to say, has taken over the reins of my role after almost 20 years as chairman, and Bel brings a strong history of building businesses and operating companies that have been publicly traded.
So I'm delighted and proud to be here as well with Cameron Pforr, who I'll introduce later, who's just recently joined us in 2024 as our first Chief Financial Officer. Next slide. So looking at Mtron Industries broadly, we're a vertically integrated radio frequency solution provider, highly reliable, highly engineered, highly robust. Our products are used in the field, both in combat as well as for very important guidance systems and other forms of integrated assemblies that help with signal jamming and guidance. Our customer base will have a few logos, and if you go on our website, you can see the broad mix of customers along the line of Department of Defense work, avionics, and space. And as I mentioned earlier, we've had some results since the spin, since coming to market, where the stock price has improved and is today trading in the 50s or below 50s.
Continue on. Slide five, please. This slide here again is a nice snapshot of where the business has been and where it is today. Our product lines and filters, oscillators, and crystal resonators are shown here in some of the graphics. These Mtron products are found in some very important systems that are used again on the battlefield. The company is approaching $50 million in sales, with gross margins in the mid-40s. We have a healthy backlog and top-line revenue growth, followed by a top-line revenue growth in the low teens, with EBITDA margins at around 20% and free cash flow conversion of over 50%. This is a platform which our board is focused on continuously building to grow market cap, and we believe there are significant-sized targets that we can pursue, and we're very, very excited about the road ahead in that context.
The equity markets have opened a bit, but with that said, we do believe that under the new administration, this will be a ripe environment for deals, for transactions, and we're very excited, and we have a strong team to pursue those. If you look on the bottom right, strategically targeting larger opportunities, this is not in the M&A front. This is in the, in effect, organic profile of the business. We've had an 80% increase in programs since 2021, and that is really a testament to the strong engineering culture within the firm, which is focused very much in the filter oscillator solution arena. Our tailored new products, again, are also representative in our sales channels, where we work with our customers in design, represents about a quarter of our sales annually. Let's go to the next slide, and incidentally, these slides are available on the website.
Looking on page six, you could see some of our applications in key markets. We average about 16 design slots on nearly every Boeing and Airbus commercial plane, for example. If you look at the left corner of commercial and aerospace, we provide rugged, proven, reliable oscillators, clocks, and filters in numerous applications from flight control to navigation, and we serve the smaller regional business jet market with manufacturers using our proven components for similar applications. So that's an exciting area. Satellite business has grown significantly, and space capabilities have increased over the past few years, and we continue to invest in that area. If you look at our website, you will see some of the prospects and some of the new design wins that we've announced. On the top right, electronic warfare.
This is a recent target market for us, and we've made great gains with recent design wins at key suppliers, and this is, of course, the changing nature of warfare, where Mtron, through radio frequency designs, is a pure-play market leader. The radar demand as well, if you look on the bottom right, it's increased over the past few years, and the need to detect smaller, slower-moving targets has grown, sometimes also smaller, fast-moving targets, and our components and our engineers are continuously designing to get into the broader systems of, again, the changing marketplace, and then lastly, the precision-guided munitions sector, again, think hypersonic, very smart with onboard radar and data links driving the need for our products, both ground stations to the actual unit, and we do think that Mtron is well positioned in what one can call the Internet of Things across these broad applications and segments.
We continue to drive in each channel collectively. Next slide. So, just a summary of some of our highlights, and we'll get into that in a second. Strong revenue growth and cash generation, attractive end markets with long-term contracts and loyal customers. Some of our customers have been with us for decades. Unique capability to manufacture in the U.S. for mission-critical supply chains. We're an ITAR-approved facility with locations in a few spots around the world. Our financials are strong, and we have strong organic and inorganic growth and opportunities. And the production capacity at the organization is robust, and we believe has continued legs going forward. Slide eight, please.
To outline some of the growth drivers for the business, and if you go back, if you think of the earlier slides and the components that I laid out, weapon systems and the replenishment of the needs driven by the more recent global conflicts as programs need to be modernized. The modernization of these systems helped drive the defense component subsystem growth, where we are a key supplier. Airbus and Boeing continue to be important conduits for our throughput, and that backlog continues. We're excited about some of the new markets. I mentioned space earlier, and clearly some of the new developments of munition systems and guidance. Our R&D and manufacturing processes as well are organized for this growth, and we continue to invest in this area, so the five key points to think about as you look at Mtron going forward. Slide nine.
And then just lastly, and this is really a broad, blunt instrument to simply outline the fact that the markets we operate in are big. Defense electronics market is estimated at $150 billion going to $230 billion, with a 6% CAGR. And with the new administration, we believe some of the tenets and some of the verticals within this that we participate in are going to be significant in their growth trajectory. The commercial aviation market is $200 billion and growing at 7%. And space, satcom market, it's a $77 billion market with significant growth, 10% expected CAGR up to 2030, where the market's expected to be $160 billion. So we're excited in the arena that we're in.
We continue to expand and drive our strength in some of these niche components where we operate with continued investment into integrated systems and the development of our R&D and engineering business lines. Now, I mentioned earlier Cameron Pforr, who joined us as our Chief Financial Officer in 2024. I'm delighted to have Cameron. He's our first Chief Financial Officer at the firm. He brings a background of investment banking and the management of businesses, both public and private. He has been instrumental in a handful of real growth opportunities, which also touch on the defense sector, so I now hand it over to Cameron, and Cameron, just for the audience and for Needham & Company, this is your first time presenting here. If you could just give a brief introduction to yourself better than I can, and then I hand it over to you.
Sure. Yeah. Thank you, Marc.
Good morning, everyone. My name is Cameron Pforr, as Marc mentioned. I joined Mtron in September. Very excited to join the team. The team was really executing quite well since the spin-out in 2022. I really joined to help take them, help them get to the next level, both organically as well as looking at inorganic growth solutions. Some of my background speaks to that. I've been in the industry for about 30 years, both as a manager and advisor to technology companies, and then also as an investment banker and bank consultant. I ran several data storage startups and have run two cybersecurity startups. I've also worked pretty extensively in this sector as a banker and as an advisor over 30 M&A acquisitions. Looking forward to really helping Mtron build and double our revenue over the next several years.
So I wanted to talk really briefly about the product portfolio. I think Marc's covered this really well, but we're very unique in the industry. We're the only supplier that we know of that does both filters and oscillators and can also do modules or assemblies. So this gives you a good breakout of our current product base, what we're selling today. You'll see that resonators and solutions are about 20% of revenue. They're right now our highest margin product, around close to 60%, actually, whereas our filters and oscillators are in the 40s. We have had very good margins on our products over the year, and they've been increasing pretty significantly over the past couple of years. They've gone up from about 36% a year, year and a half ago to close to 45%-48% now. It kind of depends on the quarter and the product mix.
And that really has to do with a lot of the design work we do on behalf of our clients. So almost every engagement, especially in our program wins, which is about half of our revenue right now, we're designing the product against very, very careful specs and then manufacturing to their standards and delivering it on time. And that's what's resulting in some higher margins than you see traditionally in the industry. It's really that engineering that's baked into every product. Okay. And as Marc mentioned, we do have a global footprint in terms of how we deliver, but we're, I think, uniquely positioned. We have two facilities in the United States capable of delivering to our DoD customers, the Orlando and the Yankton facilities. So Orlando, down in Florida, it's where we do most of our filter work.
Yankton in South Dakota has a similar history in terms of, I think, that both of these companies, they were two separate companies that we brought together in 2004. They both were founded in the mid-60s. In Yankton, we do a lot of our oscillator work. We use India for some assembly for components and modules that we then bring back to the United States before we sell. All these facilities are ITAR compliant or registered. So the India facility, we have a manufacturing certificate for ITAR. It's not an ITAR facility in itself, but it allows us to deliver ITAR products that come through the U.S. And then in Hong Kong, we have a sales office. And that helps us work with a lot of the contract manufacturers that we deliver to that have been outsourced manufacturing capabilities for some of the larger primes. Okay.
Here are some of our customer base. You'll see we have over 70 customers. A lot of them have over a 10-year history with the company. We have shifted over the years in terms of the markets that we focus on. So, in the 2000 timeframe, we were largely telecom-focused, and that was a difficult market, very commoditized. We have really moved over the years into the aerospace and defense market as our primary market. So, that's 70% of our revenues in the most recent quarter, followed by avionics as our second largest market. And in avionics, if you look at that, that's where we call it. It's our commercial aircraft. We're ultimately selling into Boeing and Airbus frames, but we're doing it through a number of different prime providers for them. So, Collins and L3, Garmin, et cetera, Leonardo. Those guys are all supplying Airbus and Boeing.
And that's how we're generating those sales. And then one of our growing markets is space. So in the space sector, you'll see that we focus on a number of the leading providers. So certainly Boeing being one. We're in both the satellite and the space launch area. And in all of those areas, and this is about 5% of revenue. In all those areas, we're both on the ground controllers and communication systems to the satellite or the spacecraft. And we'll usually also have a deployment in the communication system within the space vehicle. But more of the dollars are really on the controls in the ground stations. And then industrials is an area where we're still doing business, but we do less than we used to in the past. That's really for test and measurement.
We don't mention that there's some other customer bases that we'll talk about in a minute. I'll also go into some of the growth markets that Marc mentioned and a lot of these are contained within our aerospace and defense market, but drones is one, radar, EWR, other ones, and we do have a slide on just what we're doing in the drone industry since there's a lot of interest in that today when we get to that. Okay. Okay. So here's a drone market slide just to give you a feel for it. So in the drone market, we've actually been in this space for over 10 years. So it's gotten a tremendous amount of interest and investment over the past several years with Anduril being kind of an investor sweetheart.
We sell to a lot of the larger platforms in this space, and we've been doing it for over 10 years, so if you think about that, a lot of the ISR platforms, and then also they became kinetic platforms over the years as people attached missiles to them for different counterterrorism and military roles, but some of the systems we're in are Global Hawk and Reaper, ScanEagle, Fire Scout, Gray Eagle. These are a number of the bigger platforms that will be managed and run for years, so we're not in the FPV drones, which are the smaller drones that people are typically buying from China. We're in these larger military platforms, and also, there's a large commercial segment that's developing too.
So we have design wins with some of the leading newer vendors in this space like Anduril and Echodyne and people that are doing innovative things in this market and trying to reduce the cost significantly and increase capabilities at a much lower price point. So we're excited about the growth potential here. And we expect that defense and space will be fast-growing markets for us. And you can see in this slide, for example, some of the areas that we fit into the ecosystem. And this kind of speaks to a lot of how we deliver to the market. So often when we sell into a program, for example, there'll be 15 or 17 different components or modules they buy from us. And so we'll fit into a number of the different systems.
If you think about a drone system that's being flown over, I don't know, Afghanistan or Ukraine, for example, doing ISR work, we'll be in both the ground controller and the communication system on the drone. Now, often these larger drones have anti-drone radar on board to make sure that they can identify and evade other drones or attack aircraft. We'll also be in electronic warfare devices that are for counter drones. And then lastly, we potentially could be in the guidance system of a missile system or something like that that might be on the drone as well. So a lot of different opportunities to deploy our product there. Okay. Marc talked about the growth strategy and gave out five bullets in terms of how we're kind of beating the market in terms of our revenue growth.
I think the revenue growth has been really impressive over the past several years. We have a five-year CAGR of around 12%. If you look at the last two annual years, in 2023 and 2022, we grew 19%, roughly 20% each year. For 2024, we've announced the first three quarters of the year. We're also on target to hit that 19%-20% growth rate in that time frame for this year. We haven't announced Q4 results yet, but we expect a strong finish for the year. We've really been driving more program business. Contracts. These systems, when they go into play, it might take three or four years to get them from design to production, but they will often be in production for up to 25 years. This gives us a really nice stable growth curve for the company.
And we've been leveraging these relationships to get into new opportunities. So when we're in with a Raytheon or a Lockheed or a Grumman or something like that, we'll be working with their architects developing a product. We'll obviously enhance the name recognition of the company and understanding of the capabilities that we have. And with positive delivery, we'll usually get into other programs with them. We're also doing a lot of R&D on behalf of our clients. And so trying to drive the curve of the capabilities there and providing more engineering content. And then lastly, so that's all speaking to organic growth. We do look at M&A as something we want to start executing more on. We've done deals in the past. We're accumulating a lot of cash. Our stock is performing well.
We do think we have an ability there to pull in other providers that are in the component space or even the solution space, and hopefully in A&D, but we can even go broader than that and I think bring a lot of leverage from our business to those products and companies. I did want to touch on some of the metrics we follow. I know we're kind of running out of time, but I'm going to go through a couple of these real quickly. We've done quite well since the spin-out. When we did the spin-out in September of 2022, we were doing about $8.4 million a quarter of revenue. Our last quarter, we did $13.2 million. It's up 57% since that period. If you look at just the past year, we've increased year over year for Q3, 21%.
We increased by $2.4 million to $13.2 million last quarter. Our margins have gone up significantly as we brought in more program content. We've gone from 32% in that 2022 period to our last quarter, 48%. 48% is pretty high. That's due to a really favorable product mix, I think, in the 45%-49% range is what we would expect repeatedly. Net income has increased significantly as well. We brought that up to $2.25 million, $2.25 million per quarter. That's come up over 300% over the past two and a half years. Our margins are now in the 20s. We had 25% last quarter. I think the low 20s is a reasonable expectation. As Mark has said, we're starting to generate a lot of cash right now.
We ended the quarter with $8.5 million in cash. We do have some employees cashing in some of those options, which is bringing cash into the company, but we're also bringing in $2.5 million-$3 million in cash a quarter at this point in time, and we've seen a significant increase in our EPS because of that. Really quickly on new product development, I think this is important to understand the business. We spoke earlier about just the % of new products driving the business, and that's helped drive the growth. The other thing we see is that as we have increased our revenue base and gone more toward program fulfillment, we've been able to increase our ASPs quite a bit, so it's come up from the $70-$80 per part now to over $100, and we do expect that to continue to increase.
This is really a reflection of us building in more capabilities for clients and also doing more work with modules and subsystems. Lastly, here's a financial summary. I think I've covered some of these things on the last slide, but I did give you a feel for where we ended the last quarter. Q3 was really good for us. We did say in November that we're going to beat our year-end expectations on revenue. In the September frame, we had raised our expectations for a year to $46 million-$48 million revenue. In early November, I announced that we would exceed that $48 million into the range. And we do see a trickle down. So I think our margins will be strong for the period. And we'll also likely beat our EBITDA estimate slightly.
On the backlog side, for Q3, we had a backlog of around, I think it was $39 million, which is a little bit lower than we wanted, but we did just win a large $10 million order for a repeat contract, and we do expect several other orders to come in over the next several months that are of significant size, so we're ending the year closer to the 50 number. We're not going to hit 50, but we'll be in the high 40s again, and if you're as an analyst, you're thinking about how do we hit the next year target. We feel very strongly about the following year. We have a lot of backlog coming in. We do have some orders coming in, and traditionally, we do about 25% of the bookings we get in one year, we'll ship in that same year.
So that'll add to what the backlog provides us for revenue potential for this coming year. Okay. We talked a little bit about M&A and how we'd like to do more of it. We are trying to be very careful about it. It's a pricey market today. But we see a lot of opportunities given our stock and given our cash position and our ability to raise capital to do creative deals. We're really trying to find we'd like to enter new markets and then also expand our technology expertise and product portfolio. Really key to us is unique assembly and design capabilities of that engineering talent. We'd like to have our proprietary products that help us protect our margins and then access to key customers and programs. And then lastly, in terms of long-term targets, I talked about the end-of-year 2024 goals that we had published earlier.
Longer term, I think we think we can maintain kind of a 10% revenue CAGR, if not greater, but I think that's what we can promise today. We're trying to build that, obviously. Gross margins are very significant given the industry. So we're in the 45%-50% range long-term. We'll hit that this year as well. Then for EBITDA margins, I think 21%-23% is a very, very realistic goal. So throwing off a lot of cash. We do make significant investments in engineering and CapEx, but we have a very good free cash flow conversion, and we are putting a lot of cash on the balance sheet and like to put that to work, as we mentioned before, and potentially M&A and other growth opportunities. So Marc, I don't know if you have any closing remarks, but those are the ends of the slides.
Thank you, Cameron, and thanks for your time. So Chris and colleagues at Needham, we can open this up for questions directly.
Yeah. Thank you very much for that overview. If anybody in the audience has any questions, feel free to submit those through the portal, and I'll be happy to relay those to management while that's getting queued up. Cameron, you had mentioned that the company is one of few who has the combined offering in filters and oscillators. Just curious, how important is that being a one-stop shop as a differentiator for you in the marketplace?
Good question, Chris. So thank you. We actually don't have any real main competitors that do at all what we do. We do have, obviously, very good companies that compete with us for making oscillators or making filters.
But this allows us to, and basically, most of the primes are looking to have fewer suppliers and also have very stable suppliers and U.S.-based suppliers. So I think it does give us an advantage when we're trying to go into more provision of sub-assemblies and modules. And we buy components from other companies as well. So we like to be a good industry player and play nicely with others. But I think we're pretty uniquely positioned in the marketplace. And it is helping us drive, I think, more program business and also kind of move up market to supplying more sub-assemblies where we're trying to include all the components that we provide in a product and that helps us with our margins.
You had also highlighted the presence on a number of drone programs, and drones are certainly going to become a very big focus through the Collaborative Combat Aircraft Program and others for the Air Force. Are there any differences in the amount of content on a drone versus a manned platform for you guys?
Yeah. I think it's more of a growth driver than anything else, Chris. So I did mention that we can play in four or five different areas within a drone program in an aircraft frame and systems for some weaponry and radar as well. So we can play in the same areas, but they're going to come from different suppliers and potentially different programs, whereas in the drone world, they're often supplied by the same supplier. So it's one customer relationship versus five.
Got it.
And I know Cameron mentioned that, but our current drone programs are these larger drones themselves, which are kind of, they're significant in size. And we know that with recent conflicts, there's more move towards miniaturization. Our view is that Mtron needs to be at the epicenter of connectivity. And that's from the ground stations in various jurisdictions to the drones themselves, of course, but also in munition guidance, manpacks at the soldier level down in the field for radios. So it's that connectivity of the battlefield where we really think about that value chain. And the larger drone programs is where we're strongest. And that obviously has a lot of alignment with what we do in the space and aerospace sector. So miniaturization of drones may be more of a commoditized arena, although we're focused on it quite diligently.
Great. Thank you very much for that.
I think we're almost out of time. I'd just like to give management the opportunity for any closing remarks.
It's been two years that Mtron Industries has been public. We'd like to thank our shareholders and investors. The shareholder base has continued to evolve. And we're excited for 2025 on multiple fronts. So we encourage investors that are looking for exposure in their portfolios for something aligned in this fashion to please contact us. And Cameron will be available, as I would, or any other management team to take your questions. So we welcome the opportunity to trade on the New York Stock Exchange and to be here for you and your clients. So thanks so much.
Yeah. And thank you, Chris, and the Needham crew for inviting us and letting us participate in this great conference.
Thanks for joining us today.