The LGL Group, Inc. (NYSE American: LGL) (the “Company” or
“LGL”), announced its financial results for the three and nine
months ended September 30, 2019.
Summary of Q3 2019 Financial Results:
- Revenues of $8.6 million, up 35.5% compared to Q3 2018 of $6.3
million
- Diluted net income of $0.91 per share, compared to $0.10 per
share for the prior year quarter
- Order backlog improved 45.0% to $23.3 million at September 30,
2019 from $16.1 million at September 30, 2018
- Net income of $6.1 million for the year-to-date period and $4.5
million for Q3, 2019 included $3.3 million from the Company’s
release of valuation allowance related to its U.S. deferred tax
assets.
- Adjusted EBITDA was $1,258,000, or $0.25 per share on a diluted
basis, compared to $576,000, or $0.12 per diluted share for Q3
2018
Commenting on the Company’s Q3 2019 results, Executive Chairman
and CEO, Michael J. Ferrantino, Sr. stated, “Revenue increased by
$2.3 million compared to Q3 2018, or 36%. The growth in revenue is
directly attributable to the actions put in place earlier this year
in order to address the growth that we anticipated. In particular,
increasing our footprint at our low-cost manufacturing facility in
India, adding primarily touch labor at both our Yankton and Orlando
facilities, as well as investing in new machinery has increased our
ability to increase our output. New orders, as stated in our last
press release, did come in lower than the first two quarters of
this fiscal year where we were able to book orders in advance of
plan, however we still are forecasting backlog will increase year
over year. Adjusted EBITDA came in at $1,258,000, more than double
the $576,000 reported in Q3 2018 or $0.25 per diluted share
compared to $0.12 in the same period of the prior year.
With our improved performance, the success of our operational
plan to exit the low-margin telecommunications business and focus
on the high-margin highly engineered defense and aerospace
industries, and the strong backlog and outlook going forward, the
Company released $3.3 million from its U.S. tax valuation
allowance, which directly flowed through to the bottom line.”
Mr. Ferrantino continued: “As evidenced by our 3rd quarter and
year-to-date financial performance, this will be a good year for
our company. Yet there is more to be accomplished, and the team
continues to strive to build a bigger and stronger company. While
we are pleased with the organic strategy put in place a few years
ago and which certainly should continue to payoff, more needs to be
done relative to acquiring something from product lines up to
complete business that are synergistic with our two existing
businesses, MtronPTI and PTF, with our strong balance sheet and
management team which has proven it can acquire technology, product
or complete businesses. We are prudent in our review of potential
partnerships, but I do expect that activity will increase over the
next year.
“Finally, this press release will be my last as your CEO. As
previously indicated, I will be retiring at year-end. I want to
thank all of our shareholders, members of our board, our
management, all of our employees, and our customers for the support
given me over the last 6 years.”
Investment in SPAC:
As announced last week, LGL has acquired membership interests in
LGL Systems Acquisition Holding Company, LLC (the “Sponsor”), the
sponsor of LGL Systems Acquisition Corp. (NASDAQ: DFNS), a special
purpose acquisition company formed for the purpose of effecting a
business combination in the aerospace, defense and communications
industries (the “SPAC”). On November 6, 2019, LGL Group contributed
$3.35 million to the Sponsor to fund the Sponsor’s purchase of
private warrants in a private placement that is scheduled to close
simultaneously with the consummation of the SPAC’s initial public
offering. Each private warrant is exercisable to purchase one share
of common stock of the SPAC at an exercise price of $11.50 per
share, subject to adjustment. The proceeds from the private
warrants will be added to the proceeds from the SPAC’s initial
public offering to be held in a trust account. If the SPAC does not
complete a business combination within 24 months from the closing
of the SPAC’s initial public offering, the proceeds from the sale
of the private warrants will be used to fund the redemption of the
shares sold in the SPAC’s initial public offering (subject to the
requirements of applicable law), and the private warrants will
expire worthless. There is no assurance that the SPAC will be
successful in completing a business combination or that any
business combination will be successful. The LGL Group can lose its
entire investment in the SPAC if a business combination is not
completed within 24 months or if the business combination is not
successful, which may adversely impact LGL’s stockholder value.
Management will host a conference call tomorrow, November 13 at
11:00 a.m. eastern time to review the Company's 2019 third quarter
results. Participants are invited to access the call by dialing
(844) 401-3350 (within the United States), or (248) 847-2523
(international callers) approximately fifteen minutes before the
conference start time and provide the conference ID 3798199.
About The LGL Group, Inc.
The LGL Group, Inc., through its two principal subsidiaries
MtronPTI and PTF, designs, manufactures and markets
highly-engineered electronic components used to control the
frequency or timing of signals in electronic circuits, and designs
high performance frequency and time reference standards that form
the basis for timing and synchronization in various
applications.
Headquartered in Orlando, Florida, the Company has additional
design and manufacturing facilities in Yankton, South Dakota,
Wakefield, Massachusetts and Noida, India, with local sales offices
in Hong Kong, Sacramento, California and Austin, Texas.
For more information on the Company and its products and
services, contact James Tivy at The LGL Group, Inc., 2525 Shader
Rd., Orlando, Florida 32804, (407) 298-2000, or visit
www.lglgroup.com and www.mtronpti.com.
Caution Concerning Forward Looking Statements
This press release may contain forward-looking statements made
in reliance upon the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21 E of the
Securities Exchange Act of 1934, as amended. Forward-looking
statements include all statements that do not relate solely to
historical or current facts, and can be identified by the use of
words such as “may,” “will,” “expect,” “project,” “estimate,”
“anticipate,” “plan,” “believe,” “potential,” “should,” “continue”
or the negative versions of those words or other comparable words.
These forward-looking statements are not guarantees of future
actions or performance. These forward-looking statements are based
on information currently available to us and our current plans or
expectations, and are subject to a number of uncertainties and
risks that could significantly affect current plans, anticipated
actions and our future financial condition and results. Certain of
these risks and uncertainties are described in greater detail in
our filings with the Securities and Exchange Commission. We are
under no obligation to (and expressly disclaim any such obligation
to) update or alter our forward-looking statements, whether as a
result of new information, future events or otherwise.
THE LGL GROUP, INC.
Condensed Consolidated
Statements of Operations
(Unaudited)
(Dollars in Thousands, Except
Shares and Per Share Amounts)
For the Three Months Ended September
30,
2019
2018
REVENUES
$
8,588
$
6,338
Costs and expenses:
Manufacturing cost of sales
5,049
3,833
Engineering, selling and
administrative
2,417
2,028
OPERATING INCOME
1,122
477
Total other income, net
82
68
INCOME BEFORE INCOME TAXES
1,204
545
Income tax (benefit) provision
(3,326
)
67
NET INCOME
$
4,530
$
478
Weighted average number of shares used in
basic EPS calculation
4,901,698
4,772,674
BASIC NET INCOME PER COMMON SHARE
$
0.92
$
0.10
Weighted average number of shares used in
diluted EPS calculation
4,965,808
4,889,550
DILUTED NET INCOME PER COMMON SHARE
$
0.91
$
0.10
For the Nine Months Ended September
30,
2019
2018
REVENUES
$
23,058
$
18,440
Costs and expenses:
Manufacturing cost of sales
13,970
11,143
Engineering, selling and
administrative
6,676
6,173
OPERATING INCOME
2,412
1,124
Total other income, net
353
165
INCOME BEFORE INCOME TAXES
2,765
1,289
Income tax (benefit) provision
(3,286
)
146
NET INCOME
$
6,051
$
1,143
Weighted average number of shares used in
basic EPS calculation
4,872,461
4,722,597
BASIC NET INCOME PER COMMON SHARE
$
1.24
$
0.24
Weighted average number of shares used in
diluted EPS calculation
4,965,989
4,837,785
DILUTED NET INCOME PER COMMON SHARE
$
1.22
$
0.24
THE LGL GROUP, INC.
Condensed Consolidated Balance
Sheets
(Unaudited)
(Dollars in Thousands)
September 30, 2019
December 31, 2018
ASSETS
Cash and cash equivalents
$
11,161
$
15,508
Marketable securities
8,954
3,775
Accounts receivable, net
4,902
3,394
Inventories, net
6,476
4,466
Prepaid expenses and other current
assets
352
242
Total Current Assets
31,845
27,385
Property, plant, and equipment, net
2,603
2,086
Intangible assets, net
421
477
Deferred income taxes, net
3,433
127
Right-of-use lease asset
364
-
Total Assets
$
38,666
$
30,075
LIABILITIES AND STOCKHOLDERS' EQUITY
Total Current Liabilities
4,885
2,752
Total Stockholders' Equity
33,781
27,323
Total Liabilities and Stockholders'
Equity
$
38,666
$
30,075
Reconciliations of GAAP to Non-GAAP Measures
To supplement our consolidated financial statements presented on
a GAAP (generally accepted accounting principles) basis, the
Company uses certain non-GAAP measures, including Adjusted EBITDA,
which we define as net income adjusted to exclude depreciation and
amortization expense, interest income (expense), provision
(benefit) for income taxes, stock-based compensation expense,
investment income and other items we believe are discrete events
which have a significant impact on comparable GAAP measures and
could distort an evaluation of our normal operating performance.
These adjustments to our GAAP results are made with the intent of
providing both management and investors a more complete
understanding of the underlying operational results and trends and
our marketplace performance. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for net earnings or diluted earnings per share prepared
in accordance with generally accepted accounting principles in the
United States.
Reconciliation of GAAP Net Income Before
Income Taxes to Non-GAAP Adjusted EBITDA:
For the Three Months Ended September
30,
2019
2018
(000s, except shares and per share
amounts)
Net income before income taxes
$
1,204
$
545
Interest expense
—
5
Depreciation and amortization
125
122
Non-cash stock compensation
5
6
Investment income
(76
)
(102
)
Adjusted EBITDA
$
1,258
$
576
Basic per share information:
Weighted average shares outstanding
4,901,698
4,772,674
Adjusted EBITDA per share
$
0.26
$
0.12
Diluted per share information:
Weighted average shares outstanding
4,965,808
4,889,550
Adjusted EBITDA per share
$
0.25
$
0.12
For the Nine Months Ended September
30,
2019
2018
(000s, except shares and per share
amounts)
Net income before income taxes
$
2,765
$
1,289
Interest income
(1
)
(1
)
Depreciation and amortization
365
371
Non-cash stock compensation
17
19
Investment income
(346
)
(206
)
Recovery of note receivable
—
(4
)
Adjusted EBITDA
$
2,800
$
1,468
Basic per share information:
Weighted average shares outstanding
4,872,461
4,722,597
Adjusted EBITDA per share
$
0.57
$
0.31
Diluted per share information:
Weighted average shares outstanding
4,965,989
4,837,785
Adjusted EBITDA per share
$
0.56
$
0.30
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191112006052/en/
James Tivy The LGL Group, Inc. jtivy@lglgroup.com (407)
298-2000
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