M-tron Industries, Inc. (MPTI) Earnings Call Transcript & Summary

Okay. Good afternoon. Thank you for coming to our Investor Day presentation. Appreciate it. Last year, we did it at the Harvard Club. So I'm really glad we could host it this year at the NYSE. This is kind of a fun place to do it. I don't know how many people have rung the bell downstairs before, but I've only been here twice. I used to be an investment banker. I probably took 40 companies public. So anyway, we're going to get started. Marc Gabelli, our Chairman, our Co-Chairman is here. He's next door. He's probably going to come in and say a few words, but we have several Board members here as well. Hendi Susanto is here somewhere and also Rob LaPenta, Jr. is here. So feel free to introduce yourself to them afterwards if you have any questions or feedback. [ Tony Bennett], one of the Gabelli analysts for the military space is also here. And so between Hendi and Tony, we're -- they do a good job understanding the story. And thank you, Anja from Sidoti for coming. She does a wonderful job covering us. So a great person to refer to and their firm. They've been really helpful, really driving the stock, helping us introducing us to good investment teams. So thank you all for coming. Today, I'm joined by Bill Drafts, our President and General Manager. So Bill is down in the Orlando facility, which is really our corporate headquarters. I am up in the D.C. area and kind of -- I know I spend about 3 weeks a month on planes, usually going to investor conferences, it seems these days. But that's not where I want to spend all my time, but most like it down in Orlando. So we're going to get started. And please interrupt if you have questions. It's a little bit longer presentation than normal. We just want to make sure that we try to go in a little bit more depth, make it worth your while for coming, but also want to address your questions. And if we don't have an answer, we'll get back to you. So we'll take some notes as well. So -- okay. So to start off, just a safe harbor statement. We ask that you look at all our filings. We did file our 10-K, March 26, 2026. It has obviously a lot of the risk factors that we think are appropriate for the firm and the space we're in. And just a reminder that any forward-looking statement we make today is just that it's an estimate. We're not required to make updates to all those statements, but we do ask that you refer to all the documentation we publish with the SEC. Okay. So really quickly, I think most of you are pretty familiar with Mtron and the story. But Mtron is a very unique story, I think, especially these days, and it's kind of at the crossroads of where a lot of the industry is going. I think personally, this is the most -- and I've been in the defense space since 1986. This is probably the most interesting time in -- certainly in the defense industry in my short history, I guess, with it. The past quarter itself, like Q1 of this year was really revolutionary in terms of how the Department of War was addressing the markets. And so -- and we're really a beneficiary of that, but it's not by happenstance. It's because there was a lot of hard work that was done earlier to position the company well for these market changes. Marc, do you want to say... is our Chairman, Marc Gabelli. Do you want to say a few words, Marc, while we get started?

Just thank you, everyone, for being here. There are some new faces. We had an LGL Group meeting just before this, and thank you for those that have come for Mtron itself. I think we have Cameron and Bill that will handle the formalities. And the basic outline, as Cameron said, is you have a very strong balance sheet and cash generation. But the business itself really hasn't changed. So the important thing now is for Cameron and team to start to continue to diversify the business and ultimately grow its organic business profile with key customers and an orientation towards diversified defense. So thank you, Cameron.

Thank you, Marc. Appreciate you coming. Okay. Okay. So some of the highlights. We're very aerospace and defense focused. It's now 70% of revenue. We moved into that market in the 2004 time frame. That's when Mtron and PTI actually merged, and they both made a conscientious effort to get out of the commodity markets and go more into customized markets with long program tails. So -- and that's really been really incredibly important to our success. After we did a rights offering last month, now we have about 4.3 million shares outstanding. No debt, and we're cash flow generating. As Marc said, we're actually putting a fair amount of cash on the balance sheet. We've raised about $70 million over the past 6 months, right, through the warrant offering and the rights offering. And we have just around $94 million if you add up the balance sheet from Q1 plus the rights offering proceeds. So very well positioned, and that helps us tremendously in the market. It really strengthens our position with our customers. So -- and also last point here, broad employee ownership. Actually, every employee in the company received stock when we went public. We went public through a spinout from LGL Group, who just presented earlier in the day. And it's been really great to see not only the dedication of our employees, but also them kind of enjoyed some of the rewards of what they're building. And then lastly, we'll go through some of these profile points. But obviously, I think we're pretty uniquely positioned in some high-growth niche markets, and we'll get into more depth on that. Okay. So here are the investment highlights. I highlight these almost every call, but strong revenue growth and cash generation at this point in time. We are -- the cash flow from operations is probably $11 million to $12 million a year. Our CapEx has gone up a little bit this year, but it's still relatively de minimis given the growth potential ahead of the company. We have very attractive end markets and long-term contracts or programs. And the distinction there is that in some cases, for some markets, we have 2-, 3-year contracts. In other areas, we're getting annual POs for 1-year production. But we know that the system that we're producing for, we've been essentially locked in. We've been qualified. They may have 1 or 2 vendors. And that program is probably going to run 20 years. So it could be in the avionics industry or it could be in the defense market, but both of those markets have some similar characteristics there. We have a very unique capability, kind of advanced manufacturing in the U.S., obviously, something that the Department of War is very concerned about. They're trying to strengthen it. I was with Assistant Secretary Cadenazzi. I was at a conference he was attending and just hearing about the programs they're putting in place to strengthen the U.S. industrial base is really encouraging. And Bill and I fight that, particularly Bill every day, just trying to find people to hire. That's like our biggest problem. I think we have, at this point, very compelling financials. And also tacking on to that a good inorganic growth story, and we'll go into more detail about the kinds of things we're looking at there. And then lastly, we have the production capacity and the management team ready to do much more than we're doing today. So if you look at our facilities in Florida, they probably can handle -- and also South Dakota, we probably can handle $100 million of revenue kind of through that plant. And we'll get into that a little bit later in the presentation. Okay. So next slide is just some of the highlights, I think, as you're trying to figure out like why Mtron is performing the way it is and what makes us unique in the industry. The first one on the left is that we are very vertically integrated in the RF space. There's a lot of vendors in the RF space. Most of them rely on number of suppliers for all types of things, might be outsourcing test, might be machining, plating, all types of processes. And over the years, particularly since COVID, I think, we started bringing more of those processes in-house, and that gives us a tremendous advantage. We don't always use our in-house capabilities. We'll figure out what makes the most sense for the particular contract in hand. But what that lets us do is shorten our lead times for delivery. So we're very, very competitive on that front. And it also improves our margins. We're capturing more of that margin, and that's helped drive our gross margins from the mid-30s up to where they are now in the mid-40s. The other thing we're going to highlight is just the superior customer base we have. So I think we have over 70 customers -- you'll see them on the customer slide in our primary markets that have been with the company more than 10 years. A lot of loyalty, but also just a recognition in those firms of our capabilities, and that helps us win more business within the Raytheon or whoever it might be. And then lastly, we've had strong market performance. So very good metrics over the past several years. And I think it's a great stock to buy for that reason, if you look at it. Okay. And then the last slide I'm going to talk about is just the team itself. We have a really high-quality Board. Several of our Board members are here today. They come out of the defense industry as operators or investors in strictly defense as well as the investment world. So several members of Gabelli Asset Management team. So with Marc and Hendi and David Goldman and also Bel Lazar runs a competitive power amplifier company, long-time operator in the industry. John Mega was one of the original founders of L3. So operated a lot of the radio and satellite parts of that business, knows our industry extremely well. So -- and Ivan Arteaga, who was actually CEO of Mtron at one point in time. And then lastly, in the management team, this is just the executive management team, but we have a deep bench. So Bill and team have built a really nice group down in Florida, very extremely dedicated. Everybody is really -- is there almost 6 days a week, I'd say these days, right? So most people are working Saturday mornings as well or Saturday afternoons. A lot of experience in manufacturing and design. Linda, who's our Executive Vice President of Finance, handles all the accounting teams, and she does a lot more beyond that, but that's her primary role. She's been with the company 20 years. But before that, she had a lot of manufacturing experience, which she brought to the business. And then Bill -- Bill, when you step up, why don't you give them a little bit about your background, but Bill has been in the industry quite a while as well with a number of other companies. And just having that experience base helps us kind of maintain and move the company forward. My experience is a little bit more varied. So I'm a little bit more of a generalist. I started out in the defense industry, doing a lot of balance assessments, which kind of drove military procurement. I spent 12 years as an adviser at Bain or investment banking before moving over to like company management. So I've run 3 businesses to date that were defense-focused, one in data storage, 2 in cybersecurity and now Mtron. Okay. So Bill, why don't you give them a little bit about the history of the company?

Absolutely. Thank you, Cameron. My background is I'm a design engineer that made the choice of either staying technical or going management and I went management. I've run a couple of companies, and Mtron is by far the funnest company I've run, great team, great products, great customers, great mission. And so we're having a lot of fun down in Florida and South Dakota. And it's been going on for a while, right? We've been doing this for over 60 years. We were in space back in the early '70s before space was the thing and cool. And if I were to add a couple of bullets to this slide, I would say '25 and '26 -- next time we give this presentation, you'll see some solutions-based things going on. We have some super exciting solutions that are in development right now with the customers being tested. We're iterating and that's why they didn't make the slide, but they'll be in production in '27 and '28. And they're very high-frequency master reference oscillators and our new E-Vibe OCXO line with a PLL that has a great radar application. And so I think the key to this slide is we just keep innovating, right? That's what we do. We solve problems. Customers bring us the absolute hardest things to solve. And through iteration and through working with the customer tightly, we've become an extension of their engineering team and solve the most challenging problems. Okay. So what is Mtron overall? We have really 3 product families. We have filters. And within filters, we have numerous types of topologies. Each one is a very different technology and each technology has its advantages and disadvantages, either in frequency or in selectivity or an insertion loss. And so when a customer comes to us for filters, we can basically choose the right technology for them, and it's all within our own control. And so the customers love that. Oscillators, same thing, different oscillators for different solutions. And then we take those great products, including crystal resonators and bolt them into solutions. And that's really new for us. We entered the solution market back in 2020, and we just continues to grow. Our customers love it because, again, they have a retiring force that they call it the gray tsunami, where all these RF engineers left the industry. And so we've been able to get some people in, and we're becoming an extension of the -- our engineering team and actually solving the whole problem for them, meaning not just a component supplier, but a solution supplier. Sales-wise, growing nicely, $56 million last year. Same basic breakdown between R&D -- excuse me, aerospace and defense and avionics with roughly 65% to 70% and 20% to 25%. And then the rest is test and measurement, space, both important for us, but certainly not the big lion's share of our revenue. Same thing, we're really a filter company that's trying to diversify product-wise and become more of an oscillator house, and you'll see that definitely in this year's numbers and going forward with some of our newer products. And of course, we always want those solutions that start becoming meaningful in this pie of product revenue split. EBITDA margins, CAGR, I think these are all just world-class numbers. Backlog, almost 2 years of backlog, which is fantastic. And so -- we'll obviously see a little bit of slump in backlog going forward because it is lumpy, as Cameron mentioned, but certainly doing everything we can to try and streamline that out. Okay. So we talked about each product family. Filters, they separate -- you're in a contested crowded electromagnetic spectrum. So basically, think of your cell phone and also your cell phone stops working. It could be lack of signal. Well, there is signal there. It's just that the filter on your front end has too much insertion loss and so the signal can't make it through. So if you use our filters, you probably make it. Oscillators, same kind of thing, you're setting a standard. And so it's very important that standard never varies over temperature, vibration, shock. And so oscillators are used in all kinds of applications, which you go into. Resonators are actually the very heart of the company. Our original name was Piezo Technologies Inc. So these are piezo technology devices. What that means is it's a slab of quartz, just right on the ground, you cut it, you slice it. If you strike quartz, it makes electricity and absolutely, if you vibrate it -- excuse me, if you put electricity into it, it vibrates. And so what that means is it just helps you create a very specific frequency that doesn't -- it has -- it doesn't have a lot of other frequencies. So in your filter, in your oscillator, you just want an exact frequency. And so that's super important. I know I'm talking a little engineering speak, but this will be the end of it. And then solutions. And so obviously, we take all these great things and other people's products, if we don't make it, if there's an ARM switch or something else in there, we will add that to it and basically just solve the customers' solution need. Okay. So focusing on oscillators. Again, they're a reference frequency. They can't change over temperature, vibration, humidity, anything. They have to be dead nuts, right? And so they are used in a lot of comms and comms is our biggest market. And so every radio has a frequency standard. It determines what's going out, your cell phones, same thing. There's 1 million different frequencies in the spectrum all around you in the air and your device has to be able to select one and it has to be able to produce one. And if you produce something different, well, then you're -- whoever you're trying to communicate is not going to see the signal. And so that's superly important. This world's best-performing vibration immune, OCXO to the right, top right is one of our most recent products, and it is getting traction. It is the definition of hockey stick. And you don't see hockey sticks very often. In my 40-plus years of doing this, I've probably seen 2. And this one is a crazy hockey stick. And so we are really ramping up on this. It's a great product. The market really needs an oscillator that can be on a vehicle, on an airframe, whether it's a drone or a helicopter or a plane and its frequency does not change with all that rattle and vibration. That's super important. And so great product there that you'll hear a lot more about later this year. Of course, EW systems, they need the oscillators to be stable and then some filtering in there as well, but we're talking about oscillators. And then control systems, that's a pretty secondary market for us, a little bit more commodity, so we don't see a lot of opportunities there. And filters, we talked about a little bit. It has to be super selective. You can't have a lot of insertion loss, which means the signal loses its strength as it passes through your filter. And so -- and you obviously want to be very selective. And so those things are super critical in these applications of communications, electronic warfare systems and radars. And those are our big markets for all of our products. So in a nutshell, this slide says a lot, but really, when we meet the customer and they have an opportunity, we really try and be an extension of their engineering department. Engineers meet with engineers right away. If you guys have any friends that are engineers, you know we're different. Usually, we're not social. And so we talk engineering speak. If you read Dilbert, which is a hilarious cartoon, it's just we think differently. We're always trying to problem solve. My wife goes nuts because we'll go to the grocery store and I'll say, okay, let's move that over there, it'd be way better. It's like, no, it's not a problem to solve. Let's just get our stuff and get out here. And so -- but that's what we do. And so when engineers get together and solving problems and the customer is asking for things that really may not be physically possible, we'll say, well, if you make this trade-off, then you're going to get the best solution. And so it starts this iterative dance that goes for months and sometimes years. And finally, at the end of the day, you have the best solution that nobody else would have spent that much time and handholding to get in there. And so it's really a marriage. And so that's one of the biggest differentiators of our company is we're going to commit the time. We're willing to do the iterative dance. We're willing to do all the modeling, all the fast fill prototyping right? Because as Cameron mentioned, we're very vertically integrated. So if I have to machine something, I don't have to wait 8 weeks to go out of house. I walk to the machine shop and say, hey, Fred, can you do this right away? And he goes boom, I got the next day. And so super advantage there. And other things, board population, laser welding. I don't think any of our competitors have a laser welder and so on. And then we can test it. We have all these test capabilities in-house as well. And so all those things give us a huge advantage. New products, so what that leads to is because this new product engine just keeps churning, 30% of our revenues each year are from products that were developed in the last 4 years. And we use a 4-year window because from the time we do that iterative dance for a year, then we finally get a solution, they test it, they put on the airframe, they go into LRIP and then go on full rate of production, it's 4 years. It's just our sales cycle is very long. But that's the negative. The good thing is now I'm on a Jet Strike Fighter that's got a 40-year run rate. And so it's going to be in production for 40-plus years. And so I've got a design slot that's 40 years of continuous revenue. And so certainly, in my opinion, worth the fight, worth the aggravation, but you got to pick your winners, right? If you spend all that time and you lose the program or the customer uses the program or whatever, you really got to pick your battles. So that's very important we do our research on the front end, as Cameron mentioned, make sure we're on the right program. If the program has multiple bidders, we're on all the bidders, so that no matter who wins, we're on the airframe or whatever the application is. And so other key points on the slide is the number of products. We're just -- again, that sales filter at the front end is generating higher revenue per product. That's exactly what you want to see, which leads to higher ASPs. We're adding more value. We're not a commodity supplier. And so as we keep adding that value, our ASPs, we can command a higher ASP because we're just bringing more value to the customer. And so this is just a great slide showing all the hard work that the team has been doing. This is Cameron slide.

I am going to share duties today. So yes, and so Bill gave you a great overview of some of the products we make. So if you have questions, we really want to speak to kind of how are we differentiated. And I think we are. One of the proof points of that is that over 50%, I believe, of our aerospace and defense design slot wins or design wins are -- we're sole source. So very unique position in the industry. And we have, frankly, a lot of competitors. There are a lot of competitors in the filter space or the oscillator space, but we've stacked up very, very well over the years. So the next thing we want to talk about was just some of the markets we're after. Some very high-growth markets, especially these days, you read the newspaper every day. The U.S. defense budget, the request for this coming year, $1.5 trillion of procurement, up 42% from the prior year, unheard of scaling if it passes. But also, they've been talking more recently about what are the investment areas that it's going to go into. So it's in a lot of RF spectrum analysis. It's in autonomy. It's in radar, building new ships and things. And it's in the areas that really we have a very strong focus on. And that's really been helping us build our backlog. We've had a really good bookings year, had a good bookings year last year. And I do think it's going to be probably accelerating, right? We're now competing with some of these really long missile contracts, for example, that are 7 years and 7-year procurement cycles. So -- and then you think about some of the other markets we're in. So obviously, precision guide munitions, radar, EW, drones and communications in general, those are all kind of the military markets we serve. Commercial aerospace is our next biggest market. So that's really come back strong. Over 16,000 aircraft in the backlog. That's supposed to take 15 years to build. And then there's another like 43,000 supposable aircraft that they need just to handle the passenger traffic over the next 20 years. So incredible demand there. And then also, we're active in the industrials markets. And so we play in several different areas there. Test and measurement is one of them, downhole oil drilling sensors. There's some other areas, too. We do a little bit of telecom still. Those are all kind of lumped into the industrials market. Okay. But plenty of growth there. Then the next thing I want to talk about was just some of the change in the defense market. So been a lot of change over the past year. I think when Secretary Feinberg or Under Secretary Feinberg joined pretty much right away, he realized that there's a disconnect, right, between our needs and our capabilities. So he and Assistant Secretary Duffey, almost immediately started working with the larger primes, the Raytheons, the Lockheeds and others about retooling and kind of rebuilding our defense infrastructure and starting to scale to handle our strategy, right? If you looked at the missile stockpile, they talk about that a lot, right, on the news. We -- how much -- how many missiles and precision-guided munitions have we used in Iran? We were -- earlier, we were saying we were sending too many to Ukraine. We're kind of exposing ourselves if we were going to have an Asia strategy as well as a Middle Eastern strategy. Those things have really led to a lot of changes in the defense department. So one is retooling how we do contracts, making them much, much longer in length, and they call that the demand signal for the Raytheons and Lockheeds to make the investment they need. That's one of the changes. There have been much quicker procurement cycles, and they're trying to move to more of a software procurement or a solution procurement model. So a lot of new companies, defense tech companies coming into the market that approach it from that way. So they're building products, iterating very, very quickly and rapidly, much quicker than the large primes we were doing in the past. And there's big implications for defense suppliers essentially. So now we're being asked to look out several years of production and build for that anticipated demand. So right now, the next slide is going to show you one of the -- this is a CSIS report, and it's on the web, so it's accessible by anybody. Really good study. The Wall Street Journal has also done some studies on this, but this is really just talking about precision-guided munitions. And it talks about the cost for some of these exquisite systems as they call them. And these are some of the more strategic systems that the U.S. has right now. And I talked about the estimated pre-war inventory, and then this was an assessment done about a month ago, what's the impact of the Iranian conflict. You've heard about people shipping stores from Korea and other places in the Asia to the Middle East for this conflict. And this is creating a huge demand for increased production. So we're definitely part of this. We're -- if you look at some of the announcements from Raytheon and Lockheed, they went through the various systems they've already received contracts on, but there are other contracts, obviously, in the works, too, that will be announced over time. And we're not on all those programs, but we're on our fair share. And we were asked probably 9 months ago, 10 months ago to start and this was -- because this was common knowledge that Secretary Feinberg started its negotiation in February, kind of like a week or 2 after he joined. We asked how can we scale to support this? And if you look at the production facilities at the bigger primes, it's very manual. So it's going to take them some time to build out their infrastructure to handle this increased demand. But for several of these systems, they've either been contracted to double or even quadruple production. PAC-3, for example, on the Patriot side with Lockheed is being asked to triple and the Tomahawk production is woefully low. Other areas like AMRAAM is probably going to double. And there's various -- it's coming out piecemeal to be frank with you. But we're seeing our fair share of this. And I think we're going to probably increase the content we're delivering today. The one thing I did want to mention, though, that do not expect a big uptick in 2026 from this activity. This positions us very, very well for the future, but there is a lag in the industry. It's not an inventory-based system. It's really a just-in-time system. So we're being asked if we win these contracts to really up our production for late '27, early '28. Okay. And there was 3 or 4 slides in the presentation. I'm not going to go through them all in detail. But this presentation will be online, so you can certainly go through it, and it's a good reference for you. But people often ask us how we're deployed, what types of products we make are in different types of systems. So we included this. We've included, I think, precision-guided munitions, radar. This is a really exciting area for us right now, and I'll talk a little bit about this in a second. But how are we being deployed in radar, EW and commercial aircraft. These are just some examples. And if you have follow-ups, we're happy to have calls with you guys, just send in an e-mail to [email protected]. But just to talk about the radar market, for example. We've been involved in radar for quite a while. It's an area we wanted to penetrate further. So we started really kind of upping our design work in this space several years ago. And as Bill said, it's a very iterative process. We get our salespeople once they qualify something and all of our salespeople are engineers at heart. They were engineers at one point in time. We bring our engineers in to work with theirs to work on the specs and to design a product that meets their needs. So if you look at the U.S. radar systems, for example, almost every large fire control radar is being redesigned, right, because there are different types of targets, whether it's hypersonic missiles traveling much quicker than other types of missiles or it's drones, loitering could be very small. So there's a refresh in general taking place in the space. But one area that we're seeing a tremendous amount of growth in is there's a new class of radar also being developed by newer companies, these defense tech companies. And they're developing midrange phased array radar, which are much less expensive. They're designed to quickly lock on to very small targets and to manage. It's really for counter drone activity. So if you read about Ukraine or the Baltics, they talk about this drone wall they're developing, right? And this is from this type of radar system. There's also been a lot of announcements in the U.S. about border control radar, also there's drones from Mexico from Cartels and other potential adversaries. U.S. airports are all going to have these types of systems, right? There's a lot of infrastructure to protect. So we're seeing tremendous uptick in this market. And this is one of the areas where we have a really unique hold on it because of the products we developed. And it's -- this e-Vibe product, I think, is very unique in the industry. Okay. So some of the growth drivers. And these haven't changed yet, although some of them have been accentuated. But the weapon system replenishment market is coming on stronger than ever. That's recognized. I think the U.S. strategy has frankly changed over the past year or 2. I think if you look back 20 years at U.S. military strategy, we're extremely technically advanced. Most of the military procurement was designed to help the U.S. fight a very short war with overwhelming firepower and technical superiority. And now there's a recognition that, first of all, we're going to have to potentially fight 2 different conflicts, but also there are other obvious areas who have been making big investments like you look at Ukraine and Russia, 2 extremely sophisticated combatants, look how long that conflict has gone on. There's a recognition, right, that our -- the amount that we're producing is just not enough to meet the potential demand. And that's -- as Elbridge Colby has come into that strategy position, they've made some significant changes there. Modernization programs we talked about, specifically in radar and some other systems. The backlog of aircraft is really driving a lot of growth. It's going to be one of our strongest growth areas this year, and we have a nice backlog there going forward. We are expanding into new markets. So actually, one of the areas -- I guess, the area's highest growth in our backlog this past year has been space. And I think there's been a lag in space, honestly, like part of it is because they were trying to figure out the golden dome architecture. Also, we play in some markets in the space market, but not everywhere. We're not in LEO. So we're in MEO and GEO satellites and a lot of ground stations. And that market is changing, too. People are going to multiband, that's a requirement now for communications. And then lastly, we have a strong R&D and manufacturing base. And our R&D teams are answering almost twice as many requests for quotations that we were a year or 2 ago. So the volume of opportunities is really increasing. And that's helping -- as Bill was talking about earlier, the ASPs are going up and also the size of the contracts are going up. And that lets us be much more selective about what work we take on that helps us develop better margins because we don't have as many processes on the floor. I didn't want to say a lot about the TAM. It's obviously a very large market. We're a relatively small player. We have a lot of opportunity for growth. We've been taking growth now because some of our programs are expanding, but we're also winning a pretty good market share from several of our competitors. And we talk about the competitors on most calls, but very few have the breadth of product that we have. Usually, they're specializing in filters or oscillators that might be just one type of filter. And just having that broad relevance really helps us. We have a great rep force. And I think we're -- they want to cover just a few companies on their line card, and we're providing them a lot of product they can push through their channel. So Bill, why don't we talk a little bit about the sales model, if you would.

Yes. Thank you, Cameron. So as I mentioned before, it's really important to get engineers involved early in the process. The last thing that you want to do to an engineer is have them talk to a salesperson or somebody who doesn't understand the technology. They're going to vet them out right away and go, give me somebody who knows what they're talking about. And so that's exactly what we do. And all of our reps have an engineering mentality. They have intimate relationships with the customer, and they know -- they get their basically finger on the pulse of programs, and they'll hear a rumor and a lot of times, these programs are black, meaning it's got some code name like fire water or whatever. And so we'll have to try and vet that and figure out how does that tie to the defense budget. And so that's a lot of time we spend there because that's not easy. But all these guys are out there. They're absolutely the tip of the spear for us. And then when it gets to a point, they qualify it, then we send a CAM, which is a degreed engineer, as Cameron mentioned. So it's a customer account manager to the site, to the customer, meet them and then you start engaging engineers. And usually, those are Zoom meetings, generally not in person there. And so as Cameron mentioned, generally speaking, we're a sole source provider. We do have some competitive situations, and we're always competitive on the bid, but it's that just the level of effort that we put into it. We really spend a lot of time on the risk section because nobody likes risk. And so we spend a lot of time on our proposals, really identifying all the risks and then what we're doing to mitigate them. And we've been told by customers 2 things that every supplier wants to hear. One is you have the best proposals I've ever seen. That's number one. And then two, once we start designing the product and we ship the samples and they test them, they say, it's the best product we've ever seen. So when I hear those 2 things, I usually hear them 2 or 3 times a year. That's music to my ears. And so that tells me my team is doing the right thing. We're listening to the customer. We're doing exactly what we need to do to meet the specs, and we're developing proposals that identify risks and how we're going to mitigate them and go through this challenging tunnel that we have to go through to meet the specs. We do have a long heritage of developing great products. And so we're not a commodity supplier. Obviously, everything we do is bespoke. And so we really focus on that market, and we don't have the cost structure to be a commodity supplier. So that won't be in our road map. It is important to note that Cameron mentioned the one-stop shop that can't be understated. We have reps with extensive line cards and their line card has 15 or 20 different principles. It could be cables, capacitors, but they're all RF related. And so when the rep goes in there, he'll say, "Hey, do you need this, do you need this?" And then we get to Mtron, he goes, oh, well, Mtron, they've got filters, they have oscillators, they have solutions, they have crystal resonators. And then within those, we brand label products. So we'll do a make buy. And so we don't make everything we sell. It's not a big part of our -- 10% of our revenue is brand labeled, but we're always engaging brand label suppliers. And we've just signed on 3 in the last year that we're super excited about. We're starting to get some traction. And so hopefully, we'll have some press releases on some design wins there and so same thing. The customer does 1 PO and they can -- it's easy for them. It's like going to Walmart, right? You load up your cart with 10 different things. They come to Mtron and load it up with 10 different things. And so it's a real value to the customer as well. And of course, we're aligned to long-term defense programs. That's where I was talking about the sales funnel and how you really study and choose your battles wisely because if you choose the wrong program or the wrong customer, you're going to spend all that time on a loser. And so we spend a lot of time upfront management team, everybody gets involved to make sure that we're picking winners, and our track record has been pretty good so far. And so why do we win? Obviously, world-class service. We actually pick up the phone. I know everybody says that, but how many times have you been disappointed by a vendor? I mean, especially at home, your window cleaning, lawn work. I mean it's just -- everyone has an excuse why not to do something. It is very frequent that we will call a customer after we submit the quote, we follow up, and we'll give them a couple of days to digest it. And we'll say, "Hey, how does our quote or proposal compared to our competitors?" And they'll go, competitors, nobody has quoted yet. I love to hear that. If we're the first in there with a quote, that gives the customer more time to digest and they're ready for it. And frequently, the other guys are 3 or 4 weeks late, we'll shoot by then, they've awarded it because they got time frames. And so we really work hard to give that world-class service, which means first to give a quote, first to follow up, first to deliver prototypes, first to deliver LRIP and continue on that trend of being first. So the vertical integration we talked about is a big part of that as well as the team dedication. Unrivaled product development, we talked about the 30% of revenue coming from new products. If you were to come to our plant, which hopefully you will be in the near future at our annual meeting, you will see vertical integration that is really unrivaled. Of the 4 technology companies I've run, I've never seen anything like it. I've been at companies that outsource just about everything in their final value add. That's not us. Mtron is we do everything. We cut crystals, we lap, we polish, we etch, we deposit metal just like Intel does with a physical vapor deposition machines. We have 4 CNCs with a fifth one coming in, in 2 weeks. We have a full pick and place line. I know these are all engineering terms are boring you. But the bottom line is we are super vertically integrated. So design capability, simulation, unparalleled. And of course, we talked about all the years of experience on our team and how they're really versed in everything. All right. Cameron?

Okay. Really quickly. Yes. This is our customer slide. We don't publish names of every customer we have, but you'll see that all top 10 defense primes or customers. We do a lot of business with them. Our largest customer is about 35% of revenue, but that's not because it's very -- it's not really concentrated to be honest with you. We have over 10 programs with them. They were 3 separate companies that actually emerged. So just kind of an artifact of the industry. But you'll see really the prominent names in all these different sectors that we focus on. And then what's really encouraging is just because of that customer support level and when we get reviewed by our customers constantly, we're considered -- we're an approved supplier. It has very, very good standing in all these different organizations. So we have over 70 customers have been customers for 10 years or more. Okay. Our footprint. So we do manufacture in the U.S. We have a facility in Orlando. We have another facility in Yankton. And then we also have a facility in India where we do some assembly that's also registered to produce ITAR products. And that's pretty unique. So there's a push in the defense sector, right, to have things onshore. And we're of the few vendors that's totally onshored. And then more importantly, if you look at the size of our facilities, we're also well situated to kind of cover the growth of the company. So we do think we have room for about $100,000 of production in the facilities. If you come down, and I know Anja was down there recently and a few others here in the room have been there recently. We do have space around the edges of our main facility where we've had different processes over the years. We can put more machines in there. And we're running a full first shift and like a skeleton crew for the second shift. So to get to that kind of number, we would have to hire and get to a full second shift. Okay. So next, I just want to talk about some of the areas for growth. One is our customer relationships are critical, getting in the door for new programs. We've already an approved vendor. It makes it much easier to do business with us. And we also have a very good reputation for delivery on time and also high-quality products. If you look at our design engineering team that continue to develop new products, and that's really driving the new program growth that Bill talked to. And without that, eventually, things would slow down a lot. But fortunately, we're gaining ground in those areas. And then lastly, we have a really good opportunity in front of us on the M&A front. And that's -- we're actually -- we're obviously well capitalized at this point in time. We've been pretty active in the market, looking for about 1 year, 1.5 years. We have an active screen. We're working with several advisers to help us look at companies in the market or companies that would be a good fit. And I'll go through a little bit of the strategy on the M&A front. But one of the outgrowth of that is those 3 partnerships that Bill had talked about earlier, where we found some companies that had really unique capabilities, but weren't at the stage yet where we could acquire them. They weren't profitable enough where there was more risk in the technology that we want to take on as a company. And -- but we have formed value-add partnerships where we are -- they are revenue producing. In one of those situations, we're doing all the manufacturing as well. So very, very high margins, which is great to see. And our customers love it because they have less people to go to for this a bigger breadth of products. Okay. Okay. So in terms of investing and how we're investing for organic growth, the #1 investment we're making is headcount, right? So people ask us, well, what would limit you or what are your challenges for growing? It's -- we have enough equipment. I mean we obviously -- we do buy more when we need to where we have bottlenecks. And our CapEx has gone up a little bit this past year. But the #1 thing to do is just hiring enough engineering talent and then people on the factory floor with the skills and the detail level really capable of producing these products. If you go around, almost every product is being developed under a microscope, so not an easy job by any means. But for touch labor, we have several different channels where we're bringing people on board. From an engineering standpoint, we have relationships with different universities. We're also forming new ones. So we already work with UCF, University of Central Florida, which has a good RF program. Valencia is a local college where we're getting talent for solderers and technicians. And we're forming some relationships with other engineering schools around the country that have this RF pipeline potentially for us because it's one of the biggest challenges in the industry is just finding design talent, engineering talent. And there are just less and less RF engineers being produced. So we're at this point, we're finding electrical engineers, mechanical engineers and really training them in the kind of the art and the science of this. So that's working well. The other thing I'd mention is that being situated in Florida is actually -- it's a pretty attractive situation because you have a lot of people leaving the big firms, maybe they were working in Rochester up north of L3 or somewhere else. They're 50, 55. They want to move to nicer weather. They're thinking about retirement. We're an attractive alternative. And some people come down, they just are consultants with us, and that's perfectly as well -- okay as well. And then I want to talk about this because this is, I think, an area of a lot of interest, but also something we haven't delivered on, on the execution side yet. We're doing a lot of work around this, and we're also further developing our team to do this. But Mtron has a potential to do bolt-on acquisitions, if you want to call it that. So we've been looking primarily in the RF component space and subsystem space. We do want to move upmarket to do larger and larger subsystems. We're not trying to consolidate the industry. We're trying to actually diversify our product portfolio, diversify our revenue streams and our capabilities. So finding companies in adjacent markets that we want to get into would be very helpful. Part of the reason there is that it takes 3 to 5 years to get from a design win to a full rate production. So it takes a long time to build a significant portion in the market. So in radar and space and some other areas, maybe test and measurement, that would be very attractive and that would be a very attractive opportunity to find a company that has 10, 15 contracts already, right? So that's the primary column on the left-hand side. The middle one is something that we haven't done anything on yet other than we've talked to a lot of companies. But I think if people look at Mtron, it's a very clean vehicle, frankly, right? Well-performing company, profitable, has a lot of cash on the balance sheet and clean stock, no debt. What's the opportunity there as some of these defense primes come under pressure to divest? Is there a business unit there that makes sense being under the Mtron label? It could even be bigger than Mtron. But if it's defense related, it's in our core market, it's a well-performing company, that might be an attractive alternative for someone to merge with us. And then we are looking at just carve-outs. Like if you look at the large primes, almost every single one has an RF component capability. And most of those areas are underinvested in, and we sometimes compete with them. And if they're going to sell them, I'd rather have them sell them to us than to a PE firm that's going to become a competitor. And then the last column on the right-hand side is the minority investments and strategic investments. And we talked last year about the connectivity fund, and that was kind of the germination of this idea. The team that we're working with, they're still moving forward, trying to do that, but they were trying to raise a formal fund. I think we've kind of modified our approach. We have been looking at investments in this area. And this is really to get insights into markets into new technologies that will be relevant for Mtron as we develop and make initial investments so we gain more knowledge, we build relationships, maybe we do an acquisition of the company later on. And the idea there is to really do it through partnerships. So we might syndicate part of the investment. We might do it with another partner. There have been a few other corporations who have expressed interest in this with us. And so we'll see where this goes, but we are looking at several investment opportunities. And all the ones we're looking at are in our RF kind of space that we're very familiar with. But RF is expanding. It's going to agriculture and lots of other different industries. IoT is essentially RF-based. So it provides a lot of opportunity that might be good end markets for Mtron as we develop. Okay. We did our earnings release last week, Thursday night. Happy to talk through questions you have on the financials. These are the metrics since that we did the spinout. Obviously, we've made a lot of progress from them as a company. Our revenue base is now in the $14 million, $15 million range depending upon the quarter. We've got good growth prospects ahead of us. The margin structure is now solidly in the mid-40s range. We did have a little bit of a blip last year at the beginning of the year in Q1, and this year's Q1 was much better. Part of it was tariffs and the initiation of that and that frankly, was very distracting, took a lot of resources internally as well as costs. But also, we had some new product introductions. And when you do introduce a new product that has -- it's a new technology, it's a more difficult process, you're not going to be as efficient, the first runs that you do with it. Your 50th product is a lot less efficient from using crystals and other materials as your 2000th product, right? You're going to get all those things down. So that's been moving up as well. We're now at the point where we're producing quite a bit of cash and putting it on the balance sheet. So we have good cash generation and strong EBITDA margins. And I think those will improve. If you look at our margin structure, on the gross margin side, it's going to bounce around a little bit quarter-to-quarter, and that's usually based on product mix. So we do have some products that are gross margins in the 30s and others in the 50s. And so there's a balance there in terms of what we ship each quarter. That is a strong driver of our gross margin. So a point or 2 either way is not unusual for us. But in general, it's going to be going up as we do more automation. And recently, we've done some work with machine language learning, for example, to help us understand the process. We're doing a lot of instrumentation of our product lines right now. So tracking labor materials much more closely and having a better handle on when processes are awry, for example, and making quicker decisions. So it's really kind of driving better decisions as a company. And we're going to see the benefit of that over time. And then on the EBITDA margin side, I do expect that to increase slowly as we just gain scale. So right now, we're making a lot of investments in engineering that's needed to fuel growth. But I think on the G&A side, you'll see that come down over time as we scale as a business. It come down as a percent of revenue. And here are just the statistics of the past quarter and showing the quarter-on-quarter results. And I think they're very healthy. We had 15% revenue growth year-over-year for the first quarter. That's a little bit, I don't know, not confusing, but I want to make sure you understand that. Like so last year, the first quarter, a tough quarter for us. If you look at the quarter-on-quarter growth, so we grew about 3.2% since the December quarter. So that probably gives you a better metric of what we'll do for the year. So I think we're in that 10% to 12% range for the year. But I do think that, that will be accelerating over time. Gross margin was very healthy, as I mentioned, and EBITDA margin also bounced back a little bit if we had some more manufacturing efficiencies. And then just I'll leave you with a couple of things. So one is the long-term growth model. I do think we're seeing acceleration in the industry. So our long-term revenue growth model is going to go up a little bit. A year or 2 ago, I think I had this at 10%. And to be honest, coming into that year, that was an uphill climb. We achieved that number, which was great. We definitely have more wins that are back now than we did several years ago. And I think that this will move over time. We're right now in the crux of trying to compete and win some of these large contracts. And so I think we'll have a lot more visibility in probably 2, 3 months where we'll be for this year and also several out years. But I do expect that visibility to increase quite a bit. Okay. And those are really the substantial slides -- substantive slides that we had. I just want to thank you for coming. Open to any questions you have. Several people in the room from the team. So Chris Nossokoff does our financial reporting is also here. He can help with the financial questions as well. And these are several of the conferences we'll be at over the next several months. So one thing I encourage you to do is the big show for us every year, the trade show is the IMS show, the Microwave Symposium. This year, it's in Boston, so not very far to go. Every competitor we have will be there. You'll be able to learn a lot about the industry. So I encourage you to go there. Please stop by our booth if you do. If you have questions, we can show you some of the products we talked about today. You'll also get to meet our sales team, and you'll see how solid they are. And then we're at several different investor conferences. We'll be at the Sidoti Conference a little bit later in the year. We're going to go to the IDEAS Conference in June. This year, we're also trying the Planet MicroCap Conference in Las Vegas in June as well. So looking forward to that. And so anyway, that's what we had for you today. So if you -- feel free to ask questions, yes, please.

[indiscernible] investment choices [indiscernible] in the context of having raised the rights offering, can you talk a little bit about the preferences...

Yes. So we're primarily focused on the left-hand side, right? And right now, several key team members have been doing due diligence and looking at the markets, and we have a group that helps us produce a portfolio of companies to look at. We screen those pretty rigorously. We've also recently brought board some more corporate development talent, and we have another open rec for our corporate development associate. And if you guys know anybody who wants to get involved, just more analytic firepower to help us do more diligence and process more companies. And then I spend a lot of time talking to investment banks. And now that we have more capital on the balance sheet, we're obviously a much more relevant -- it's more relevant discussion for a lot of these banks, right? So we're starting to get better deal flow, which is -- and that's where we primarily spend our time. We do look at some of the larger opportunities as well. And so for the most part, it's trying to find corporate spin-outs, but there are also some very good stories and you're seeing people go to market like the IPO market for defense companies really opened up recently, right? This is one way to get there that might be very attractive if it's a good combination with us. But it's not a primary focus area, but it's a possibility. And then lastly, I would say we do look at investments quite frequently. And sometimes we don't invest, but we do a partnership anyway. And it's usually -- it's a revenue-based partnership. But I think we will be doing some investments this year. So I anticipate us making a bolt-on acquisition, hopefully, in the next 6 months and getting to a more regular cadence as we build out the team and the capability and then hopefully make an investment or 2 a year, but the investments are going to be relatively small. Okay. Yes, please.

You had a slide before that showed all the different programs -- we're not on all of these. Who is on the programs you're not on and specifically are they different oscillator manufactures or are they different technology?

Yes, good question. So almost every single system there has oscillators and filters in it, right? So there are competitors of ours that we've lost to. So on the Patriot system, for example, we're on some variants, but not others. I don't think we're on the THAAD battery system -- yes. One phenomena you're seeing though? Yes, I can go through them. I'll list them. On the filter side, do you want to kind of just talk through some of them you see them?

Yes. Well, I think what's important to note is a lot of those decisions were made 10, 15, 20 years ago. And we messed up. I always ask the same question, why don't we get this business? Why [indiscernible]. And so well, here's a story and something happened, and we shouldn't have the same focus we have today. And so I feel a lot better now when I see a new missile being developed that will be on it than these 30-year-old designs that we messed up. Filter-wise, our big competitors will be like NIC, [indiscernible], the MPG Group, Dover. Those would be the big ones for sure. And each one has its own story. What I love to see is one of our competitors get bought which there was a ton of consolidation back to '24. And every one of those competitors now, they've almost disappeared, which is absolutely fantastic. These big companies like Kyocera or Amphenol buy this company and they just -- they try and absorb it, [indiscernible], they lose their sales challenge, they lose their relationships and pretty much then they start losing sales. And then we start getting phone calls. And so every time we see an acquisition of a smaller competitor, I -- we do a call to action all the reps and say, find out every design win they have and start calling on a customer and tell them that, hey, they just got bought, your service level is going to drop. The prices are going to increase, especially if PE firm bought them and everything go downhill, so start sampling [indiscernible] let's work. We've taken that business, so super effective.

Yes. And on the oscillator side, there are another 5 or 6 competitors. So one is Quantic, which just went public. It was merged with 4 other companies. So it will be interesting to see what happens there by Arcline. NIC is one. I mean there's something -- [indiscernible] is another. I mean there's a bunch of them. But in general, Bill is right, like 15 years ago, we were not the company we are today. And also, a lot of these systems are now being recompeted. So we're actually now very, very actively engaged in getting into some of the systems that we weren't before. And then the other phenomenon that's taken place just as the systems become more sophisticated is that now it used to be they were all bespoke manufactured. Now they have subsystems that they're trying to put into multiple missiles, right? So we're on some of the subsystems. And so that means that we're on some variants of certain missile, not others, what they use for a guidance system or communications that kind of thing. Okay. [ Vishal ], you have a question?

I remember the [indiscernible] customers were getting big of their [indiscernible].

Just losing it through attrition, right?

[indiscernible].

It is. It's just -- you have the NVIDIAs and the SpaceXs and any other sexy engineering company taking all these new grads out. And so as people are retiring and getting their 60s, we actually hire several as consultants. We have several of them that left big companies that are consultants for us, which has been fruitful. But yes, they look to us now to outsource the engineering to us. So it's a great trend. That's still going on.

And then we're also putting more of a bearhug on these young students, right, than we used to do. So that's why we're trying to develop relationship with professors, become a valid pipeline. We have an intern bay where they get to work hands on with the technologies. And so we have 3 or 4 that are there now for the summer. So yes, hopefully, they'll stay.

We have at least not seen listed like [indiscernible]. My question is, is it because you don't have presence there or is it something else going on like -- what is the important technology for those kind of [indiscernible] drone versus drone versus electronic warfare. So...

So the short answer, [ Vishal ], is that we're actually on a lot of those systems. We work with those companies. But most of them are more sensitive about allowing us to publish their names. So one thing you see, too, is if you look at like our revenue splits, and we track every program, right? A lot of those companies were doing a couple of hundred thousand a year with us a year or 2 ago. And now many of them are over the $1 million mark. And the one that we talked about that's doing that interesting radar application, they're moving from like $120,000 up to about $5 million, $6 million. So it's -- there's quite a growth in those areas. And we've been very careful to make sure that we are maintaining those relationships but developing them. And so -- and covering our bases, depending on how the industry goes -- grows.

As the new [indiscernible] develop the radar which tracks those, does that remain same or the radar also changes?

The radar is changing, yes. Yes. I mean one thing is that now you need to develop much less expensive radar, right? Like you heard about the -- I think it was a THAAD fire control radar, I don't know it was $500 million, it was a big number. You can't lose too many of those, right? Nor can you afford to put many of them out there. So now they're trying to develop systems that are 1/8 or 1/10 of the cost, but they don't see as far. So -- and they're posting them in all types of vehicles. And one of the systems that we supply, they even nail them to trees like in Ukraine or in Lithuania or something. So it's kind of interesting.

You are low cost radar [indiscernible].

We are. Yes. Yes. And there's more growth, frankly, in that sector, but we are also competing for some of these larger redesigns of the bigger systems. And SPY-6 is one that everybody talks about. We'll see where that comes out, but there are other systems also being redesigned. Anja, did you have a question?

Yes. You mentioned that CapEx increase, so what's most about [indiscernible].

Yes. Okay. Yes, good question. So we did a pretty good job, I'd say, over the past several years like scrubbing our equipment, making sure we don't have stuff that's brittle or older. So -- but now we're at the point where we've been doing a lot of automation. We've been bringing in equipment that is capable of running on its own. It has an operator doing overwatch, but it doesn't require an operator for every operation. And some of those systems have now become bottlenecks as we've expanded our production. So we're acquiring some of the bigger systems. We talked about the CNC machine as well. We got -- was a fourth horizon system that can -- we can basically set it and forget it, let it run all night and produce parts for us. So it's mostly it's equipment and test equipment. We also need a lot more test equipment just to handle the larger volumes. Okay. Yes, please.

You mentioned that [indiscernible] oscillator in-house. Why is that the case and does it mean...

Yes. I wouldn't say it turned into an oscillator in-house, but the filter revenue for whatever reason, just grew much faster. And so as we grew -- I think when I started, the filter revenue was probably 55%, climbed as high as 72% or 73%. Now it's in that mid-60s again. But I think you'll see that lower as we go forward because we are finally diversifying our product revenue. That's not easy to do because designing a filter and designing an oscillator, completely two different things. Filters have a COGS cost structure of maybe 60-40 -- excuse me, 70-30, 70% labor, 30% materials. Oscillators are completely flipped. It's 70% materials, 30% labor. And so it's just a different animal. And so you really got to change a lot of the processes, the people, the technology, the tech. And so it took us a long time to really get into it. So I think it was more of a -- the filter just out ran them and now the oscillators are going to start catching up.

Yes, Chris?

You mentioned during the presentation that R&D inbounds were up about 2x. How much of that is from primes versus defense tech? And then from your perspective broadly, do you see the defense tech companies establishing position and threatening incumbents?

Yes, good question. I don't know the split on the RFQs. I do see the revenue splits, and they're definitely becoming much more meaningful as they start to scale. There's also a lot of pressure, frankly, from the Department of War to force some of these primes to become more nimble, more like the defense tech companies and to the extent they can't get to split off divisions. So you saw L3Harris with their [indiscernible] Transaction. There'll be other ones like that. And [indiscernible], do you have a better feel on the quotes part?

Yes. I think the momentum, right? So you have these companies who have been building a platform for 20 years and for some start-up to come in and build an F-35, the interest barriers are too high. So we still see the majority of our RFQs are definitely the primes. But that said, we did a call to action, the Andurils and everybody like that. And so we are absolutely are in touch with all of them. And when this quantum thing came up, we did the same thing. Last fall, we said, hey, quantum could be RF. What are we doing here? And so we're -- we've got all these feelers out, and it doesn't take too many of those to hit to really move the needle. And so we're really in touch with those applications and customers.

Yes. And the one thing I'd mention is that on like the drone side and the counter drone side, those are obviously areas where there's a lot of competitors, a lot of newer competitors. It seems like the counter drone market is a little bit easier to pick the winners than the drone side. Like on the drone side, we've had fairly large -- we had a large contract this past year. It was program of record. It was canceled because there's so much iteration going on in the department that they're making different decisions every 6 months. So just kind of a word of caution, I guess, if you're doing your diligence on those kinds of companies. Yes, please.

General aviation side presenting with the [indiscernible].

Yes. I mean it hasn't yet. We'll see where it goes. I mean it's hard to predict how long this is going to go. But obviously, it could have an impact on air travel if fares double -- that's true.

Yes, it's -- I haven't seen it yet. It's a very long process, right? We're early on. So we deliver our parts for planes that probably won't come out of production for 1.5 years to 2 years. And so it will be a while before we see that this does continue.

Yes. The commercial aviation industry is a little bit -- has a little bit different dynamic. I mean they do have inventories unlike in the defense world. So there's a lag that works positively and negatively kind of where you are in the cycle. Yes, please.

With the acquisitions that you potentially to gain momentum in new areas or [indiscernible].

Yes. So definitely not the same area and the same product, right? So we are looking at ones that take us into some new markets or strengthen some markets. And then almost every case we've looked at, it's a diversification on the product portfolio side. So -- and there's -- we had a report about a year ago we published, but we can talk about it. There's a number of different areas where if you look -- and one thing is like if you look at what we built into our modules, we do acquire parts, as Bill was saying, we'd rather own them and capture that margin and be relevant for our investors, our customers. Okay. Okay. Yes.

Is [indiscernible] or like number of defense programs you are on like, I know you are 40 plus and the duration of those are [indiscernible].

Yes. We don't publish it regularly, but I mean, we're in well over 40 programs of record. Also, one of our larger defense procurements is not a program of record anymore, but it's still growing tremendously. So it's kind of odd. On the commercial aircraft side, we're basically in every Boeing and Airbus commercial airframe. And we're in about 16 different applications on those planes. The way that the industry is structured, I mean, they're basically using the same subsystems in all their different airframes. So they find something that's really reliable. It's been qualified. They're not going to change it unless there's -- the changes are on the engines or on the carbon fiber and the wings and things that impact weight and fuel usage, stuff like that.

What are the couple of programs you can say [indiscernible].

Well, we'll see what happens in the missile area, right? That's an area we're competing in right now, but that obviously could drive a lot of growth. And that drove a lot of the growth we saw a couple of years ago when we're growing 20% a year. This year, avionics is one of the -- commercial aircraft is one of the strongest growth drivers for our revenue base and then also counter drone radar in the short term at least. And that's a market that's not going away. It's only going to get stronger. Yes. Yes, please.

You had mentioned earlier the goal or perhaps kind of the base case to have one bolt-on acquisition in the next 6 months. Given the cashier nature of the company, there still would be a lot of cash in year end? What would success look like for Mtron for acquisitions over the next 12 months?

2 to 3 for the next, I would say, 24 months. Yes. I mean with the idea of the capital raise, I mean, one is we're talking to a lot of investors. It's kind of hard to get in our stock kind of given just the share count. So this was a way to put more shares into the market, which is great. But it does give us a very strong balance sheet. It helps us a lot with our customers. They see that we're very well financed. There's very little risk in doing at least financial risk in working with us, especially as the assets just expand. But now we have a meaningful amount where we're starting to get much better deal flow than we did a year ago. Okay. Last question back there.

Defense has been [indiscernible]. Over the last year, how does your -- you guys have been hunting for acquisitions, if your acquisition strategy [indiscernible].

It depends on what kind of company you look at. So if you're on the defense tech side, like you're more solutions oriented, the multiples are very high, especially in some of the newer areas, they're venture type multiples. So those are probably not the types of deals we're going to do. We're looking at people that have solid earnings that can contribute to our EPS. We can do an accretive deal with. And in the RF side, I'd say there's probably 2 classes on the valuation side, depending on the size of the company. If you're a founder-led company and you're in the $10 million revenue range, the multiple there is going to be less than if you're a company that's broken out and kind of built more infrastructure, then you're probably asking for 15x EBITDA.

Just to clarify if you can buy less than 15x EBITDA. Is there anything you can do on the cost side [indiscernible] or something like that where effective multiple rate will be lower [indiscernible].

That the effective rate will be lower?

Effective multiple rate will be lower because you were able to increase the gross margins or something...

Yes. Yes. No, we're doing a lot to increase the gross margin. So it's kind of where we spend most of our time.

[indiscernible] focus. Everyone knows how important it is. And any time a product closes with unfavorable margin, we have a team look into it. What went wrong, labor variance, product material variance, yield variance, gets to root cause, fix it, make sure it doesn't happen again. So it's a cultural thing for sure.

So when we talked about our ERP upgrade, we brought on board an ERP manufacturing planner recently. We're also getting through that cycle with the newer ERP, but it's design around manufacturing. We're doing a better job internally of kind of like forecasting our production, which helps us do better planning there. We're doing a lot on installing barcoding and different types of software to track labor and materials better. And all the purpose of that, right, is let's instrument the factory, so we can identify when we have a problem earlier and also understand what are all the bottlenecks, where do we have to focus our expansion to kind of meet our needs. Okay. Okay. Well, thank you very much. Really appreciate you guys attending. If we'll be around for, I don't know, 10, 15 minutes and probably kick us out. There is probably some lunch in the back room on the left-hand side if you're thirsty or hungry or anything like that. And thank you for coming.