I'm Anja Soderstrom , Senior Equity Analyst here at Sidoti. As I mentioned, next up we have M-tron Industries, and we have the management team with us. We have Cameron Pforr, the interim CEO and CFO. We have Bill Drafts, the President, and Linda Biles, the Executive Vice President of Finance. This will be conducted as a presentation followed by Q&A. 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. Good morning, everybody. Thank you for joining our presentation this morning, and thank you to Sidoti for hosting us. We really enjoy participating in this event and get a lot of great questions in the one-on-one sessions we've been doing. Engagement there. If there's not a slot available, you know, we're always open to speak to investors, and you can reach us at ir@mtronpti.com. My name is Cameron Pforr. I joined M-tron last year in September as the CFO, and I was named interim CEO in February. I was excited to join the team to really help take the company to the next level, helping it fuel further organic growth and also start looking at inorganic growth as a means of expanding our market share. My background is 30 years of experience in tech company management and also advisory roles.
I spent the last 15 years running companies from startups over to ones over $100 million in revenue. I've had some public company experience, a lot of private company experience. I've sold two companies, one to Cisco, one to Red Hat. Also, I was an investment banker before that and did a lot of M&A deals as well as capital raises. I'm joined today by a really experienced team. Bill Drafts, our President and COO, who's been at the company for five years, and then Linda Biles, our EVP of Finance and our Chief Accounting Officer. They're each going to be open to help us answer questions today and also do some presentations. With that, we'll kick it off.
First of all, I would advise everybody to read our Safe Harbor statement and note further that our investor and potential investors should look at our risk factors and the 10-Ks from last year. It was filed on March 25, 2024. We will also be filing our 2024 10-K towards the end of next week on Thursday afternoon. The audited numbers will be available during that filing, and we'll have an investor call the next morning on Friday morning at about 10:30 A.M. We'll just give you the finalized numbers for the year and also be happy to answer any questions you have during that session. For those who don't know M-tron well, M-tron has been around since 1965. The official name of the company is M-tron Industries. Our ticker on the New York Stock Exchange and the American Exchange is MPTI.
We're really an aerospace and defense-focused firm since 2004. In 2004 is when we brought two firms together that had both had relatively similar founding. They were both founded in the mid-1960s. This was M-tron, and then PTI was based in Florida. We started making the shift at that point in time to doing more defense-oriented work away from kind of the telecom space. Right now, we have 2.9 million shares outstanding. We have no debt, and we're also free cash flow generating. We ended the year with a strong balance sheet of $12 million in cash and no debt. We also have broad employee ownership, and we did that at the end of 2023. We did some stock option grants to all of our employees really to kind of align their interests with those of the investors. We are, I think, a unique American story.
We're an American defense contractor. We're in high-growth niche markets. We're very specialized. We make robust microwave and RF products, both components and subsystems to very exacting standards. We have a long track record of successful delivery in that space and a really strong engineering team. We're also one of the few that's vertically integrated RF companies in the U.S. We take a raw crystal and complete it all the way to producing a finished oscillator or a filter or a module and deliver it. This includes doing CNC machinery, surface mount assembly, full suite of testing and screening capabilities in-house, and also really robust design capabilities and a high-quality process. We're positioned to access long-term value, both as a company executing on growing our stock, but also making acquisitions and doing partnerships.
Lastly, we are a platform for growth, having a greater focus, I think, this year than we have in the past on using mergers and acquisitions as a tool. With that, let me go to the next slide. M-tron at a glance, really, this kind of, I think, sums it up. I mentioned some of these things in the past, but we are a very vertically integrated company. We do our manufacturing in the U.S. We do have an assembly facility in India to let us kind of help reduce costs. We focus on filters, oscillators, resonators, and kind of integrated assemblies. We're moving upmarket, I'd say. I mean, we're doing what we do well, but we're also trying to do more for our clients and have greater value-add. We are continually engineering new products and building subsystems as well.
We have a blue-chip customer base. Many of our customers have been with us over 10 years. A large portion of our revenue today comes from the defense and aerospace industry, but we also serve other high-growth markets. We are in avionics, and that is really our commercial airframe market where we are a supplier to both Boeing and Airbus for every single airframe they have. We are active in the space and satellite market, and we are also interested in also growing in several industrial markets like test and measurement, telecom, and others.
If you look at us over the past four years or three years since we have gone public, we have had strong returns to shareholders. We spun out in October of 2022. Our stock has been up to $71. It is actually down a little bit now, so I guess that represents a pretty good buying opportunity.
I think we have a unique strategy and really strong execution. We've had three years of growth in the near 20% range, which is really a strong testament to our success as a company and strategy. Some of the key takeaways and some of these things, we did an early earnings pre-release end of February at that point, and you can find that on our website, on our IR website. We did publish those results. They're the unaudited results, and the audited results will be out next week. We have a strong backlog. We had two orders over $10 million each received within the past couple of months. Those both announcements were made in January. We're well positioned to benefit from the replenishment of U.S. weapons stockpiles as well as the defense growth or the increased spending we expect to see in Europe.
There's been a lot of noise, obviously, for the defense sector with the new administration and if will there be cuts in the defense area or not. I think, actually, we have a pretty good defensible position. We are in many of the programs that they have carved out of any potential defense cuts. If you look at some of the announcements from the Pentagon, they talk about making additional investments than what they've done in the past for precision-guided munitions and missiles, air defense. They talk about creating an Iron Dome, essentially, for the U.S. We also are going to be a big investment in maritime capabilities with ships and with UAVs, with airborne UAVs, some of the satellite areas, and also increased communication as well as EW.
These are all areas that we've invested in as a company, and we think we're very aligned to where the defense budgets are going. In addition, we have a blue-chip customer base. Many of the industry leaders in our key markets have been customers for years, and we expect that to continue. Our organic growth remains strong. I think we are looking at a number of joint venture opportunities where we could have shared revenue and profits with partners, and we are engaged with several along that front now. We do expect to make some announcements in the next quarter or so in that regard. We are seeking acquisitions that could help bring products and customers into our fold where we could help share our successful model with other companies that are successful but can take it to the next level.
We'd like to be part of a larger organization. We're also willing to consider larger transformative transactions, people who want to utilize M-tron's listing as a vehicle. There are a number of PE-backed firms that have been on the sidelines in terms of a public stock offering over the years and might want to take advantage of working with us. Okay. M-tron at a glance, just to give you a greater sense of what we do, we've been providing RF solutions to the market since 1965, and we really focus on spectrum control with products such as LC, cavity and crystal filters and frequency control with clock oscillators, temperature-compensated oscillators, and ovenized oscillators. We also make integrated module assemblies where we wrap additional functionality around the products that we produce.
We will purchase products or components from other vendors and integrate them into a module that we deliver for our customer. If you look at the trailing 12 months of revenue, we were at around $46.9 million. In the announcement that we made end of February, we told the street that we would beat our revenue expectation of $48 million for the year, and we will make that formal next week. We have demonstrated strong growth over the past three years at close to 20% per annum. We also introduce a number of new products every year. We have design wins that we expect will have a real impact on our revenue in the years to come. We do have typically long program cycles when we get involved with a client where we will do engineering work with them.
When they are in the bidding phase, we'll deliver prototypes that prove out the specs that we've been asked to hit. We'll often go into a lower volume production as they start delivering first units to their customer just to prove the designs work and it's stable and it's meeting the specifications required. Over time, it goes into larger volume production that can last 5, 10, even 20 years in some cases. If you look at historically, our company, we're doing design wins in all these new markets that we'll talk about in a second. A lot of these design wins will take three or four years often to get to larger scale volume production. We'll introduce even up to 200 products a year, and about 30% of our revenues come from products we've developed over the past three or four years.
There is always a good harvesting of our engineering ideas and talents that we'll get a design win now, but it'll manifest itself in our revenue growth several years down the road. That gives us great visibility into the future. Just some of the markets we're addressing, and this shows you just the broad applicability of the products that we developed. These are some of the key markets. We have, on average, I think, even 16 or 17 slots in every airframe that Boeing and Airbus make. We provide a rugged, proven, reliable oscillator and clocks and filters for those applications from flight controls to navigation. There is obviously a lot of communication going on in aircraft now with internet as well, connectivity in planes, and we participate in a number of those different requirements.
We also serve the smaller jet market, but I think if you look at just the overall growth in commercial airspace, there's a really strong backlog now that we've come out of COVID through 2040 for airframes from those manufacturers. Now that we've gotten past the Boeing strike and Boeing is working out its manufacturing kinks, we do expect strong growth in this sector through 2026 onward. Our satellite business has grown significantly over the years, and our capabilities have increased there. The other area that we're experiencing a lot of growth in, we're making a lot of design wins, is electronic warfare. I think this is recognized as being critical to success on the modern battlefield.
You have seen a lot of this or discussion around this in the war that is taking place currently in Ukraine, but also in Israel, the capability of jamming drones or other types of missiles, etc., spoofing other things that take place in a modern battlefield. The market that has really been driving us the most over the past couple of years is just our activity in the precision-guided munitions area. This is an area that is going to require a lot of replenishment, as well as if you talk about, you hear about our ability to defend Taiwan, there is a recognized need within the defense environment that we need to increase our stockpiles of these types of weapons. Lastly, some of the newer growth areas are drones and radar. We have actually been in the drone market since 2014.
We're in some of the larger platforms by many of the larger primes. We've been designed into some of the drones and products being developed by some of the new up-and-comers. I think this will be a strong growth area for us in the future. In radar, we're seeing considerable demand there. There's been a redesign of most of the radar systems, and they need to detect a number of different types of targets than they did in the past. Not only a fast missile, but now they need to detect much smaller platforms that might be very slow-moving, such as a drone. There's a whole generation of radar that's being developed for the maritime environment as well as air and ground control systems. Okay.
I'm going to just touch on some of the investment highlights and then turn it over to Bill for some comments on. In terms of why we think M-tron is a great investment, we've had strong revenue growth and cash generation. We expect that to continue. This year, I think we'll actually probably end the year with close to $25 million of cash on the balance sheet. Some of that will probably come from just the exercise of remaining options out there, but the vast majority is just from our continued operations and the cash flow from the operations. We're in a number of attractive end markets with long-term contracts and loyal customers. The programs that we're in, and it's the vast majority now of our defense business, it's, I think, close to 85% of it, gives us great visibility into out years.
We're a PO-based company, so we receive often POs that are for maybe a year of production. Unless we do something wrong and can't hit a requirement or have difficulty producing or getting a part, we should be in a program throughout its life. Even though we might have an annual contract, we have very good visibility 5 or 10 years out with many of these programs. We have loyal customers, and that's earned, obviously, in this sector. You have to earn it. We do have a unique capability of producing in the U.S. That's become even more critical. There's a lot of examination about where you build these days and also the sources of your parts. We've stood up very well in that. I think that's helped our business as we continue to grow in the sector.
We have compelling financials with organic growth already, and I think we'll see some inorganic growth adding to that in the future. We have the production capability and the management team required to support continued growth. We have made a lot of investments over the prior years, just fixing what we could fix in the company, smoothing out processes, alleviating bottlenecks. That is a continual process, and that has really helped us build kind of a finely-tuned machine. Not that everything goes right every day, but I think we have an experienced team that's capable of dealing with it and working through challenges as they come up. In terms of growth drivers, what's driving the revenue of the company? I've talked about this a little bit, but there's just the armament and weapon system replenishment driven by the global conflicts.
I think even if we're no longer supplying Israel to the extent we are today, or if we were to curtail our supply of weaponry to Ukraine or other allies, there would be a large replenishment of our own stocks. We do see European defense spending increasing, and I think we'll see a part of that. There's a lot of modernization going on in the weapon systems. The cycles have become shorter just as the innovations increased. We're part of that. All these systems are much more interconnected than they used to be 20 years ago. That's all dependent, or not entirely, but it has a huge dependency on RF componentry and RF systems. We have a strong commercial airframe backlog from Airbus and Boeing. I think that'll start to pick up at the end of 2025 and go into 2026, 2027, 2028.
We are expanding into a number of growing markets like space, and we have strong R&D manufacturing capabilities and investment that's really ready for more program capture. We are making investments there in our engineering team to build out that capability and just bring in more design wins and eventually large production volume projects. With that, I want to turn over the presentation to Bill Drafts, our President and COO. Bill, if you could introduce yourself and take us through your slides.
Yeah. Thank you, Cameron. My name is Bill Drafts, and I've been the President of M-tron Industries for over five years. M-tron is the fourth technology company I've run in my 38-year career and, candidly, the most exciting one. Part of that excitement is due to our markets. Our end-use total addressable markets are large and growing.
In aggregate, our TAM is growing at approximately 7% CAGR, but more importantly, our serviceable addressable market is growing faster as we add new product families and expand vertically into solutions. Filters and oscillators drive our component product offering, with filters generating 62% of our revenue and oscillators at 20%. We design and manufacture many different topologies within each family of products, each tailored to a very specific customer need. Resonators and solutions round out our offering. We are one of the few companies in the world that offer a portfolio this expansive, making us a one-stop shop for all our customers' RF component and solution needs.
Okay. Thank you, Bill. Bill is going to be available when we have questions at the end of the presentation.
Just briefly on our global footprint, I talked about how this is a real asset to the company, but we have over 125,000 sq ft of design and manufacturing space in three primary locations. Our biggest facility is in Orlando, Florida. We also have another sizable facility up in Yankton, South Dakota, a really dedicated team there who's been with the company a long time. Our newest facility is in New Delhi, India, with about 13,000 sq ft of space. All these locations are ITAR registered, with both the U.S. locations having AS 9100 design manufacturing certifications and India having ISO 9001 manufacturing certification. We also have a sales office located in Hong Kong, which helps us work with a number of Asian customers and contract manufacturers. We run a fairly large sales rep organization. It's been quite successful.
We have over 28 sales rep organizations we work with throughout North America and the world. We are looking to expand our capabilities in Europe. We do have several reps that already serve European vendors today. I think that'll be an area of increased focus for us in the future. Altogether, we have over 310 people working across these locations, with about 240 roughly in manufacturing, about 40, 40, 42 in engineering and quality. The average tenure of employees is over 12 years, so a great base of experience. We have over 500 years of radio frequency design and engineering experience in our staff. That's a tremendous asset in this market. Just in terms of our customer base, we are expanding our customer base every day.
We're securing kind of future industrial leaders as well as expanding our reach within a number of blue chip companies. I think actually we looked at the other day, I think we service all the largest top 10 primes in the U.S. defense market for the past year. They're all customers of ours. We're trying to grow our market share within each customer, adding design wins to existing platforms and programs. That's a testament really to the customer-centric focus that we bring to it. We have over 70 customers who've been with us more than 10 years.
Okay. In terms of growth strategy, we're executing on it well, and we've seen good results to date. We leverage our customer relationships. We're very tightly integrated with our customers. Our engineers and designers are working with theirs hand in hand to develop products.
I mean, their specs, they're often at our plants and facilities kind of reviewing what we do and how we do it. Often, when we have success in one program, an engineer or an architect will pull us into another opportunity. We had something like that just happen the other day in the drone space. In terms of R&D, we're very, very market-focused. We continue to enhance our ability to deliver by bringing in new engineers or bringing consultants to help us solve difficult scientific problems. We're increasing kind of the engineering content that we deliver to our customers. That's helped us raise our ASPs over the years.
Lastly, as we accumulate cash and we're looking at how do we put that to work, we're continuing to make good CapEx investments in our plants and also invest in some of our marketing as well as our ERP systems and FP&A capabilities. We're also turning more towards M&A and partnership as a means of growth. We'll talk about that a little bit later in the presentation. With that, I'd like to turn it over to Linda Biles so you can meet her. Linda is our EVP of Finance. Linda, if you could just introduce yourself and take the group through some of our financial performance.
Thank you, Cameron. As Cameron said, I'm Linda Biles, EVP of Finance, and I've been with M-tron for 17 years now. Prior to joining the M-tron team, I held various management positions at defense and automotive companies.
I do agree with Bill that M-tron is one of the more exciting companies that I have been with, and I do attribute that to the market, the products, and the fantastic people that we have. What I'd like to do here is go over our metrics since the spinoff in September of 2022 and would like to point out that these are as of the end of Q3. Both our revenues and margins continue to improve. Revenue was up 57% during the period, increasing from $8.4 million in Q3 of 2022 to $13.2 million in Q3 of 2024. Gross margins have improved by 50%, and we're at 48% at the end of Q3 of 2024. This reflects a continued product shift to more complex products, greater program revenue, and margins will vary from quarter to quarter based on the product mix, but we expect our margins over 45%.
With our improved scale, we have seen both net income and EBITDA improve accordingly over 300% and 140% respectively since the spinoff in 2022. We are beginning to see a considerable amount of cash accumulation on the balance sheet, even though we continue to make CapEx and R&D investments in the business with cash standing at over $8.5 million at the end of quarter of Q3. Next slide, please. As we mentioned, we continue to increase our R&D spend on developing and designing new products that's resulting in new program wins. Our CapEx investment also remains strong. This slide shows that the investments are resulting in the building of our revenue, growth in new product revenue in absolute dollars, and the continued increase in ASP as we develop more proprietary designs and products and produce more subsystems and modules.
We continue a CapEx spend of approximately 3.5% of revenue, and ASPs here shown are on our produced product, not our sell-through products. Next slide. Okay. Q4 results. Again, these are our preliminary results that we published at the end of February. M-tron finished the year strong with an impressive Q4. Revenues are 18%-21% over the prior year's Q4 and just slightly less than our Q4 2024 results. This is normal seasonality for the business. In addition, gross margins continued their strong showing and substantially outperformed Q4 2023 results. Q4 margins are between 47%-48%. We haven't finished our tax provision yet, but operating income, net income, and EBITDA are expected to be close to the same percentage levels as Q3 and with the long-range goals that we have outlined in prior investor presentations. Next slide.
Our full-year results for Q4 preliminary show that revenue finished 19%-20% over the prior year. Gross margins finished the year in the range of 46%, a 500 basis point improvement from the prior year. Over the past three years, gross margins have improved over 1,000 basis points driven by higher revenues, improved manufacturing efficiencies, and improved product mix to higher margin products. We do expect to publish our final results for 2024 next Thursday, March 27th, and look forward to talking with you then. With that, I'd like to turn it back over to Cameron.
Yep. Thank you, Linda. And Anja, I know we're coming against the end of the presentation period, so I don't know if there's a question or two we should answer.
We are. I'm going to squeeze in a couple of quick questions.
One question here is if you expect to issue a 2025 revenue and EBITDA guidance.
Yeah. We will, but I don't think we'll do it in the next couple of weeks. Next week, we'll focus on giving the 2024 results, and then a little later in the year, we will give guidance for the year.
Okay. Thank you. You recently announced two rather large contracts of $10 million. How do they compare to sort of your more normalized contracts? What can we expect in further contracts like that, do you think?
Sure. Yeah, that's a great question. Those are very large contracts for us. We do actually, as I was saying before, get annual POs. Both of those contracts were expected. The first one, which is over $10 million for the year, is something we typically get annually.
The other one was a three-year buy, so roughly $3.5 million a year, $3.33 million a year. Anything over $1 million is a large contract for us. Just to give you a feel for it, in an earlier call, someone asked, "How many programs are you involved in?" Even in the munitions space, we're involved in over 40 programs. We have lots of contracts, which gives us a really good diversity of customer revenue.
Okay. Thank you. Another question here is you mentioned in a press release that you are orienting the company towards achieving corporate scale. Can you elaborate on what that me ans?
Yeah. We've actually really a testament to Bill and Linda and other team members. They've done an excellent job over the past several years improving our margins, getting our operations efficiency improved.
We are at the point now where we can get real leverage out of the model. We are looking to—we have built the systems, and we are continuing to invest in systems to help us scale the business and get operating leverage from the business.
Okay. Also, the warrant dividend that you announced recently, can you just talk about the motivation for that and maybe?
Sure. Yep. No, absolutely. We have been looking over the past six months or so about whether we should be dividending cash, should we be buying back shares, should we be raising capital. We would love to have some more money on the balance sheet, but it was really driven by a desire to reward investors in the company. First, we issued our rights.
That did not turn out to be the right approach given just the market volatility that we were seeing in the defense sector. We did a dividend warrant. The record date is March 10th, so anybody who held the shares before then will receive a warrant. The warrants have not been issued yet, but they probably will shortly within the next week or two.
Okay. Thank you. I think we are going to have to wrap it up there. I mean, you have your earnings call next week, so investors can tune into that too. I know you have a full one-on-one schedule, but to the extent anyone in the audience would like to catch up with you, I know you are very open to speak to investors.
You can reach out to the management team directly or to us at Sidoti, and we'll put you in touch with Cameron and the team. With that, I'll hand it over to you, Cameron, for some closing remarks.
Yep. Thank you all for attending today. We're excited about our future. We hope you will join us for this ride. We think there's a really good buying opportunity right now in the stock. If you look at where we trade, it's a very low multiple of EBITDA. We do expect our EBITDA to continue to grow strongly. Anyway, we encourage you to reach out if you have any questions about the company. As Linda just said, we are very, very open to that. You can reach us at ir@mtronpti.com. Okay. Thank you.
Great. Thank you. Thank you, everyone. Have a good rest of your day.
Thank you.