This is a great turnout for the afternoon, last day of the conference. We're delighted to have Cameron Pforr, CEO of M-tron Industries. I hope you're all as impressed with the company as I am. I'm a shareholder and hope you all are too, or soon to be. Cameron.
Thank you, Jean and Steve for the Three Part Advisors team has been a great supporter. We really appreciate the interaction we've had, and I think this is our third IDEAS Conference, and we've always had really good interactions with investors. Look forward to talking to you all, and hope we can also meet up in the hallways or next time doing one-on-ones. My name's Cameron Pforr. I'm the CEO of M-tron. I joined about two years ago. I'm joined by my colleague, Chris Noskov, who's our VP of Financial Reporting. Between the two of us, hopefully, we'll handle your questions today. But I think M-tron's a really exciting story. It's not a new story. It's kind of the startup that's been around for 25 years. We've been in the market for 60 years.
We were founded in the mid-'60s, when a lot of RF companies were founded. We are based in Florida, and I'll give you a little bit of an overview of the company and really some of the exciting markets that we serve, and we have a very unique position, I think, as an American-based advanced manufacturer. First, just to get started, just advise you to look at our safe harbor statement, and certainly read the notes in our financial reporting, including the risk factors. Our 10-K was published end of March 2026. With that, I'll get started a little bit on the company. First of all, M-tron has been around, as I said, for 60 years, but it's been over the last, I'd say three to five years that really we've had explosive growth.
We've seen a lot of reward from some of the investments that were made earlier in the company's history and a change of direction that I'll talk about as well. We are, I think, pretty unique in the defense sector, so we're a small cap or microcap. 70% of our revenue is from aerospace and defense, so very defense-focused. That is something that we started in the earlier, in that 2005 timeframe. Originally, as many RF companies were, we were very communications focused, did a lot of work in the telecom space, things like that. But this has been a superior market for us, and the requirements in the aerospace and defense and even the commercial avionics market really fit what we do very well. We are listed on the NYSE. We have about 4.3 million shares outstanding. We went public kind of quietly.
We were a spin-out of The LGL Group, which is a holding company, which has been public forever, they've done about 35 acquisitions over the years. M-tron is the amalgamation of three of those acquisitions. They've really built a nice company before it was spun out. We've raised about $70 million over the past six months, through a warrant offering and a rights offering. The warrant offering was really designed as a dividend to shareholders, so we're very loyal to our shareholder base. We did a rights offering as well, which had 100% subscription from the shareholder base, and raised about $42 million in gross proceeds in April. I'll talk a little bit about why we did that and what the opportunity is ahead of us that really drove us to do that.
Lastly, I'd say we have very broad employee ownership, so every employee of the company is a shareholder, essentially. Their interests are very aligned with our shareholders as well. I think in terms of what we do and what makes us unique, we're an American-based defense contractor where we attack some very high growth but niche markets. We're a specialist in robust, highly engineered products. In the frequency control markets and timing markets, we really focus on building highly reliable parts to very specific specs, building products that last 20, 30, 40 years without any wavering of their performance. That's what's really critical to our customers. That's allowed us to develop a really nice business that has a lot of repeat business.
We have customers for 20 years, sometimes 30 years, and we're building very high reliable products that they're willing to pay for because it's a collaboration with them. They're buying a lot of our engineering talent that gets built into the products that meet their needs. In terms of investment highlights, we focus on some very strong growth areas. The largest and the one that's getting the most press these days is the defense space. About 70% of our revenue is from aerospace and defense. We're also cash generating, so we're throwing off $10 million, $12 million, $15 million a year now of cash. That's growing. We have very good free cash flow. We have very attractive end markets. They're characterized by long-term customer contracts or engagements, a very loyal customer base, and it's very collaborative. It's more of a partnership, frankly. It's not a commodity sale at all.
We have some very unique capabilities of being a U.S.-based supplier. That has really come to fruition over the past five years, I'd say, in the defense sector, when there's been much more emphasis on making sure that we control our supply chain and that we can produce at volume. We're now really focused on scaling in the U.S. We have, I think, pretty compelling financials, so roughly 20% EBITDA or adjusted EBITDA margins. It can fluctuate, and I think there's some growth in that, some good growth potential there. We also have the manufacturing capabilities and the management team to support continued growth with the company. In terms of the company and how we operate, what makes our model a little bit different than others, I would say that we're basically a Tier 3 prime, right?
We service the defense primes and then also Airbus and Boeing's primes, there are a few other markets we're in as well. What we've done that really allows us to deliver a great product on time and reliably is we've done a lot of vertical integration. We have a large facility down in Florida. We have another one in Yankton, South Dakota, and then one in India. If you come to visit in the Florida facility, I think you'll really be surprised by the depth of what we do there, the different types of processes we do. We also are putting in place a lot of automation, which is really helping our margins, or will continue to help our margins.
We do a lot of things in-house that other people might not do, it allows us to deliver a better product on time and also improve our margins. The second thing that makes us sort of think really unique is the customer relationships we have. We have, I believe, over 70 customers where we've had for 10 years. We service all the top 10 global defense primes, and we'll have a customer list later, which you can take a look at kind of who we serve and which markets. Those are very tight relationships. They basically come to us with a problem. They'll go, obviously, to three or four different firms, trying to create some competition. Usually, it reverts down to a short list of maybe two firms or three firms max competing for a part or a design win.
Often, it's a sole source contract with us, a purchase order. That really just means that we were the only ones that could provide that level of product, that they had faith in our ability to deliver. I would say it's a price-sensitive market, it's not a market where price is the dominating factor in selection. On the third point I want to make, just as a stock, we went public as a spin-out in late 2022. I think the price was $13. We're about $95 today. Obviously, quite a bit higher. We've had a lot of stock movement over the past two months. Part of that was we completed our rights offering, there was no share overhang.
Also, there's been very, very good tailwinds in a lot of our markets, we're starting to see some of the benefits of that. We just had a press release yesterday, I think, where we announced we had basically a $7 million follow-on order for components we're making for the counter-drone market. That was on top. We've done $9 million in bookings this year, just in that market alone, the first couple of months of the year. The management team and board, really a good competent crew. Linda Biles is our EVP of Finance. She's essentially handling all the accounting for the firm. Bill Drafts is our president. He's the GM for our company. Bill comes out of the RF world, having worked at FLIR and TriQuint and ICx and a few others. Linda has really a hardcore manufacturing background.
She's been with us close to 20 years, but also before worked in the arms industry as a controller. She's a very good, solid team. Underneath them, we have an extremely strong sales group, really good operations team, and other groups that support what we do. Our board is also very capable. Bel Lazar and Mario Gabelli are co-chairmen, and they bring kind of different things to the table. Mario is a long-term investor in the firm, obviously very familiar with the stock trading, and they have a strong research group within Gabelli Asset Management. Bel Lazar comes out of the industry. He runs now a company called EPC Space, which does GaN amplifiers for space-based product platforms. But he's also part of EPC, which does amplifiers more broadly.
He ran a company at one point in time called API, which is now Spectrum Control, which is a large PE-backed firm, kind of firmly in our space. He's had a career basically in this type of manufacturing and engineering-focused companies. We have several other people that also bring a lot to the table. John Mega was one of the original founders of L3Harris. He ran a lot of their communications portfolio, so very relevant to us, and they're a big customer of ours. Hendy Siswanto is a portfolio analyst that covers the space as well. We've got lots of people on the board that bring different things to the table. It's a good dialogue, and I get a lot of support from the board, frankly. Just a little bit about the company.
The company has been around for a long time. We got into the space industry very early. It was two companies that came together. It was a filter company and an oscillator company. I think having that breadth of product is actually fairly rare in the industry. Most people will be a filter house or an oscillator house or maybe they make something else, but they only do one type of that. We do many types of filters, many types of oscillators. We also make resonators and subsystems. We do some integration of other people's components. That allows our customer to serve more of our customer needs. It also helps in another way. It really helps get mind share from our manufacturing reps. For us, we just have more relevancy to their customer base.
When they go in, they can sell many different types of M-tron products, which is very helpful. This gives you a little bit of a feel for some of the innovations we've done. The one I wanted to talk about recently is we started doing integrated modules in the 2020 timeframe. That's a growing part of our business. That's an area we want to continue to grow. That's taking our parts, our components, and other people's components like amplifiers and connectors and things like that, antennas, and integrating them into packages for our clients. With all this pressure in the defense budget for the Raytheons and Lockheeds and Leonardos to build more systems of scale, they are looking to outsource more and more of this design work and this integration. This kind of serves this market need very well.
We also have a really interesting new product line called e-Vibe, which I talked usually about, I mention the least. That was the parts, or those were some of the main components of those recent sales we talked about in the counter-drone area. One of the areas of growth for us this year is radar and EW. Radar oscillators are really our key to radar. With a radar, you need to send out a signal and receive. It has to be at a very precise frequency. The oscillators do that signal generation, and the e-Vibe radar allows that to be done on a moving, shaking, vibrating platform. If you don't have that compensation, then the radar won't be able to pick up a return signal.
This is really what's been critical, I guess, to some of these smaller phased array radars, which are being developed for counter-drone work. That's a product we've been working on for five years, and we're just now seeing really the rewards for that, so. In terms of the product portfolio, I mentioned this a little bit already. We do filters and oscillators, resonators, and integrated solutions. We're going to continue to grow the integrated solutions. We've done more filters in the past than oscillators, so filters is the majority of our business, and we have five or six different types of filters that we build. I think the oscillator area is really growing this year. I think it'll be a larger part of our revenue going forward.
We tend to price these things in a way that we're trying to achieve a similar margin for all of our products. Okay. One of the key things just to making sure that M-tron is always relevant to our customer base and is targeted at the right markets is just the continual R&D that we do, and the CapEx that helps us derive top-line growth in the company, but also making sure that a large proportion of our revenue is from new products. New products in our world, because of the lag or the time it takes to get from a design win to a full rate of production, in the military area, that's often three to five years.
The Department of War is trying to change that, so they've done a lot of work in the drone area with some of these programs like Drone Dominance and Gauntlet and Replicator two, where they're trying to shorten that timeframe to really enhance innovation. In general, big Army and Navy and Air Force, they buy it the old-fashioned way still. When they decide on a program, it's usually put out to bid, and some of the big primes will all propose solutions. They might pick one solution from two different vendors and then build a few prototypes and then test them. That timeframe from getting to creating the design that goes into a Patriot missile or an F-35 to when you get to full rate of production will often be five years.
You've got to really pick your battles carefully, pick who you want to work with and which programs that you think are going to have legs. We've been really lucky that we've put a lot of emphasis on this, and if you look at historically, we've been increasing the amount of new product that produces revenue. This past year, about 30% of our revenues were generated from products we developed over the past three to four years. That really bodes well for the future of the company and our continued growth. I think one of the reasons there's been so much interest in our stock is really what markets do we serve. A quick breakdown of the revenue. About 70% of the revenue is from aerospace and defense, and when I say aerospace, I'm talking about military aircraft.
The next biggest market for us is commercial aircraft, which we call avionics. There, we're a supplier to the primes or the integrators that do all the work on the electronic systems and instruments for Airbus and Boeing, and we're on every single airframe they have, I believe. We're also in the space market and some other markets, smaller markets we call industrials, and that's usually made up of telecom, test and measurement, oil and gas drilling, things like that. The big one for us over the past several years has been aerospace and defense. This slide gives you a little bit of figure of some of the markets that we attack. The largest for us is really communications as well as precision-guided munitions.
There's been so much in the news about precision-guided munitions, I'll spend a little bit of time on that. The two big growers for us this year are radar and electronic warfare, just in terms of percentage of revenue growth this year. Precision-guided munitions is about 30% of our overall revenue, so it's a very large portion of our revenue. There's some great tailwinds there. We'll talk specifically about some of the contracts coming out and how it impacts us. I mentioned a little bit about how the Department of Defense is really refocusing or rewriting the procurement rules. I am fully supportive of this.
I guess I started my career a long time ago as a military analyst, I was also a contracting officer because it was so difficult to get money into your program or your unit, basically, that I kind of learned all the rules so we could bend them essentially, right? We used to move money around, we did it all legally, of course, but you're trying to take advantage of the system or how it works. Right now, what they're trying to do is increase the velocity of innovation and also the ability of the industry to scale and produce at the quantities they need.
One of the first things that happened when Secretary Feinberg stepped on board was there was an acknowledgment, I think people already knew about it long ago, but just about how a lot of our stockpiles have been depleted, or we weren't necessarily equipped to fight two wars or to fight a war in Asia. Much of our time had been spent in the Middle East over the past 20 years, and I think the U.S. strategy was always one of having superior technology, leading to a belief that technical dominance on the battlefield is going to lead to a very quick victory. No need to fight more than several weeks. As Ukraine and Russia have been going at it for now five years, and now we're obviously involved in a conflict with Iran.
We're seeing that even smaller nations or nations that don't have a budget similar to our own or another superpower can build sustaining efforts. Asymmetric warfare is real, and it's really changing the direction of how people fight, and this is being reflected in two things. One is they're trying to increase the period or decrease the innovation periods, like the time it takes to iterate. Anduril is a great example of that. They're a company that focuses on, they do their own development versus having the government pay for it, but they are iterating on their products every six months, and I'm sure they do it quicker than that, but they have releases every six months as opposed to something that runs for 15, 20 years before it's being innovated again.
The pace there of change is really rapid. The other thing that the DOD is trying to do is help the industry scale. One of the critical problems in any defense-based company was that you're only getting a year order. You only had a year's budget approved by Congress. It was very difficult as a Raytheon or Lockheed with billions of dollars on the line to take a bet over five years or 10 years to build out a facility to double or triple production because administrations change, priorities change, and you're going to be left holding the bill if you made the wrong bet. Secretary Feinberg came out with these seven-year framework agreements. There have been three or four press releases on that. Both Raytheon and Lockheed signed seven-year deals to increase production for certain key strategic weapons, strategic missile systems.
There was another release that was probably not seen by a lot of people, but they also did something about two or three weeks ago where they went to many smaller companies, some private, who were doing some really cool weapon systems that were much less expensive, and also wrote seven-year deals with them. That's really going to change the dynamics there. This was a very hard market to get into. First of all, there was no venture money or PE money to start a defense firm 10 years ago, 15 years ago. It was such a long cycle from getting from a design to production that it was very difficult to survive, and they're trying to change that dynamic, right?
Here's one of the areas that we focus on is munitions or, the slide here really speaks more towards missiles and precision-guided munitions. This is an area where the budget, they would spend about $15 billion a year on missiles, if you look at the military budget. That was even in 2025, they did that. I think the budget request for next year for 2027 is $85 billion, just to give you a feel for the scale out there. It was two things. One is this depletion I talked about. Secretary Feinberg's seven-year framework was written in February, before Iran conflict became extended. I know that there's been a lot of dialogue between the DOD and the major primes to re-up the numbers they've been sharing, to reflect what they need now, kind of based on current evaluations.
This is a study that came out from the CSIS. They did a really good study on what would the stockpiles are, what were the production rates, and where would the military like to take it to, and how long would it take to actually build it based on current capacity. These are some of the most important systems that the U.S. government procures. We're on a number of these. I think we're probably on about half of the ones that those two firms were contracted for. We're going to be competing for more than that. In almost all these areas, there's a 2x-4x and even greater in some areas, increase in demand from the military. I know in the Tomahawk area, Tomahawk cruise missiles, we were only making roughly 50 a year. It was a little bit less than that.
I know that there, it was, I think around, if I'm just doing this from memory, but I think it was about $58 million, let's say it was $58 million a year of procurement, and they're taking it to $5.8 billion for 2027 if it gets approved. Really increasing that production. These several other systems like SM-3 and SM-6 and THAADs and Patriots obviously are really under pressure to increase production. There's a lot happening in that space. It's really creating a great opportunity for us. One thing I want to stress as M-tron's leader is that this is an area that gives us great long-term visibility and growth if we win our share of the contracts.
I don't expect to see a lot of change in the numbers this year or even next, because there is a lag as the large guys build up their capacity and then put in those orders. While we're competing now for these seven-year contracts, we don't expect to see it to really implicate or hit our numbers until late 2027 or maybe even 2028. Okay. Just one other thing you might want to check out if you're interested in this area is that The Wall Street Journal had a good article, I think it was Tuesday, on why it takes so long to build a Patriot interceptor. Because there's been a lot of those used in the Middle East. I think it takes two years to build an interceptor currently.
It's a pretty informative article just in terms of what's the process, what causes that such a lag. Those are things that they're trying to shorten. We, like a number of other suppliers in those industries, are trying to do more and more automation. The Department of War is also studying how do they fund companies to build to scale or build to actually be able to surge capacity, like in wartime. Okay. I have a few examples in here. I'm not going to spend a lot of time on it. I think this deck will be available on our IR website. We also did an investor day at the New York Stock Exchange about a month ago, where we had a pretty long deck because we had an hour and a half to talk or answer questions.
It had a good breakout of where we get deployed in these different systems, just so you kind of understand it. Essentially on a missile or on a drone or a plane, all these systems have become much more complex. Even on a drone, we've done communications to drones for a long time, but they have guidance systems. They have radar for the guidance system. They have radar to detect anti-aircraft and drones that could attack the drone, and they have EW systems. Those are all areas that we can play in. Often, our content for a missile will be five or six different parts or components, and that's about $10,000 of content for M-tron.
As you look at some of those studies and you look at where the missile production is going, that kind of helps give you an ability to kind of gauge what impact that can have on us. In radar, it's something similar. On the radar side, we do a lot more filters. But in these smaller radars, we're doing oscillators as well, so on the signal processing. This is an area that has a lot of change, so mostly due to the nature of the target changing, both hypersonic missiles as well as drones. You have small drones, loitering drones, just a proliferation of drones in general. All the big radar systems, the fire control radar systems, the over-the-horizon radar, they're all being redesigned, and we're in a number of those older systems.
There's also a new class of much less expensive radar coming out from some of these neo-primes. It's a phased array radar that is designed really for drone warfare. That's some of the orders we've had this first half of the year, and that's really a very fast-growing area. It's not just for the military, actually. I think fortunately, for us, most airfields are going to be equipped with these types of anti-drone systems. There's also the border patrol is using them for the southern border, for example, because a lot of cartels use drones for delivery, and there's lots of other applications. I think most event places like stadiums are going to have this kind of capability as well pretty soon. It's kind of an area they've looked at for a long time.
This is a very strong growing area for many years to come. On a commercial aircraft, the backlog for commercial aircraft from Boeing and Airbus goes out to 2035, I believe. They haven't even factored in really a lot of the growth they anticipate in air travel, just as the world is more integrated and there's just more and more business done and there's more people. This is an area that was a pretty slow area for us during COVID, obviously, but it's really bounced back strongly. I think it'll be one of our strongest growing segments this year in 2026. We supply components and parts for about 16 different systems, 16, 17 different systems on most aircraft.
The nature of this industry is that all these airframes, while they may be very different in terms of carbon fiber content and things, or engines, they tend to use the same subsystems on the electronic control side. These are some of the areas that we fit in. We do about $7,000 of business for each commercial aircraft produced. Okay. Just to repeat some of the growth drivers for the company. One is armament and weapon system replenishment. I used to get a lot of questions about what happens when the Ukrainian war ends. I don't get that question anymore, unfortunately. I think you're seeing a lot of growth now in the European budgets. It'll be interesting to see how much they're going to buy from the U.S.
I tend to think they want to buy from European houses, but there's just not enough capacity there yet. That might change in five years, but I think for now, a lot of them will have to turn to the U.S. for components or parts or systems. There's a lot of modernization going on, both in the defense industry as well as some other areas that we attack. Really strong commercial airframe backlog. We are continuing to kind of find new markets, and so we're very active in space, for example. We are in the MEO and GEO part of the space market, not in LEO right now, although that might change in the future. We're also trying to find new markets to go into that have kind of similar operating characteristics.
Lastly, we have a very strong R&D capability as well as manufacturing capability that we think we can scale to meet the need and to help us capture more programs going forward. Those are some of the main drivers. Okay. I mentioned our customer base, I'm really proud of this customer base and our team just for maintaining this, but these are our partners. Over 70 customers with 10+ years. If you look at the air and space and defense market, all the large primes are here, both in the U.S. as well as internationally. Thales and BAE and others overseas are good customers. Leonardo, for example. In avionics, we really kind of dominate that market for RF componentry. Airbus and Boeing buy from us directly, but most of the work here is done with their main suppliers.
The integrators, so that's the Honeywells and Garmins of the world, Rockwells, people like that, doing systems for these planes. then on the space side, we've been in this industry for a long time. A lot of military, but as well as commercial satellites. we do a lot of work in the ground station part of that, but we also have products that have been tested for radiation and other types of environments. then on the industrial side, this is a little bit of a. It's two or three markets that kind of go up and down because they're relatively small for us. we do a lot of work in telecom and test and measurement, so with like on Anritsu and Keysight, for example. then also even we do sensors for downhole oil drilling, for example. things like that.
There's a lot going on here. You can look at the agricultural sector and all the work that's being done with RF for that. I mean, really IoT in general demands some RF componentry. So, in terms of our global footprint, we're in Florida, in Yankton, and also we have a facility in New Delhi. We have about 100,000 sq ft in the U.S., and we think that in just Orlando alone, we can produce about $100 million of product a year. So we're at a good point where we can scale. It's essentially at this point adding people, adding a full second shift. We have increased our CapEx over the years, so we've gone up to about 6% of revenue, and we'll probably continue that rate for a couple of years. And that is adding a little bit of scale. We talked about growth rates, right?
We clearly leverage our customer base to get on new programs. We do very focused R&D, but I did want to touch on M&A. We have about $95 million of the balance sheet right now, and one of the prime reasons-- We're doing it for two reasons, really. One is we want to have a very strong balance sheet so that when our customers look at us, they look at us as really a supplier that's going to be here and is capable of scaling with them. So that's been really important for these larger contracts. But we also want to have enough capital for M&A, and we're looking at some adjacent markets. We want to find complementary products that broaden our product suite for the markets that we serve, or find some new customers or markets we think are really valuable to be in.
I'm going to kind of skip a few slides because we're a little bit behind on time, but here are some of the operating metrics of the company, and these are just showing us what we've done since the spin-off. Revenue is up 75%, so we're around $15 million a quarter at this point in time. Gross margins have moved from the 30s to the mid-40s, and that was through doing more of that vertical integration, but also raising our prices some after COVID. And we're at this point generating a fair amount of cash. This is our Q1 number of $52 million in cash. We've got around, actually, about $90 right now. And our EPS is up about 300% just in that timeframe. And this is available online, but we've had a very good first quarter. We see a good, strong year ahead of us.
Not dramatic changes in the Defense Department. That'll grow at the rate it's been growing, we do see a really strong year in avionics, for example, and areas in the defense market. We see a long future in defense where it's growing much stronger than that. Just to end it, our long-term model is basically, we'd like to be able to get to the point where we can grow consistently at 11%-12% organically. I think we'll see some years where it's above that if the defense budgets come through. Gross margins in the mid-40s, and we're at the point now where that can improve through more automation on the field. Then adjusted EBITDA margins in the low 20s, like 21%-23%. I do think as we scale, we'll see a lot more operating leverage.
We're not going to see much gross margin change without that automation, we're well poised to kind of continue to grow our earnings for investors. Okay. I didn't leave a lot of time for questions, we have a couple of minutes if anybody has one, and happy to meet with you later as well.
You had mentioned that the European contractors probably would prefer not to buy from the U.S. or the militaries. What's your presence in Europe if they do eventually start having primes that are building their own missiles, et cetera?
Okay. The question was, can we service the European market, and what's going to happen if the European primes can't produce, I guess, enough of their own? We have manufacturing reps in all the major European countries. We also sell already to French, Italian, U.K. companies.
We do a little bit of business in Germany as well, Kongsberg up in, I guess that's Norway. We're active there already, it seems like they've been buying from us in the States to date, primarily. They do a little bit of business over there. That's going to change as the European budgets really increase. We had our sales kickoff meeting two days ago, a lot of our European reps are pretty excited about what can take place. Even Turkey and Italy are great markets right now. We are trying to do more business over there with U.S. manufacturing, we would also consider JVs or potentially buying a European manufacturing capability just to kind of satisfy that need if it becomes a requirement. Yes.
About what percent of your products are self-generated? Your engineers have the idea versus what your customers are asking you.
The question was what percent of products are generated by our own ideas versus customer requirements. That is a tough question to ask as a percent of sales. Most, I'd say, directionally, we know which way we want to go, we're also getting a lot of market feedback from our customers. The OCXO that we built that we're now really ramping up is something we developed, we're the only one in the industry doing it. I'd say the vast majority of requirements from customers, we're always continually working to push the edge to develop new products. Probably 90% customer-driven, at least through requirements, all of them are developed by our engineers.
I've run out of time, but I'm happy to meet with you guys and answer any questions you have afterwards, and thank you for your time.