The LGL Group, Inc. (the “Company” or “LGL”; NYSE American:
LGL), announced its financial results for the year ended December
31, 2020
- Results for the year reflect strong underlying fundamentals
as Defense and Space Industry strength replaces the mix shifts from
major declines in the Aerospace industry and COVID related supply
chain disruptions
- Full year $31.2 million of revenue versus $31.9 million
reported for 2019
- Balance sheet and strategic positioning benefited from
initiatives through an At the Money (“ATM”) offering and an
announced SPAC business combination with IronNet Cybersecurity,
Inc.
- Shareholders granted value in the form of a warrant
dividend
- Mike Ferrantino named President and CEO of LGL Group,
effective April 1, 2021
Financial Results Review
Annual revenues reported of $31.2 million versus $31.9 million
for 2019, a decrease of $0.7 million. Fourth quarter revenues were
$7.4 million versus $8.8 million in the fourth quarter of 2019.
Annually adjusted EBITDA, a non-GAAP measure, was $2.7 million
versus $4.0 million for the year 2019. Adjusted EBITDA declined to
$0.7 million from $1.2 million for the quarter. (See GAAP
reconciliation in the Appendix.):
Sales growth and margins were significantly impacted by the
decline in the avionics markets. The margins also declined due to a
period shutdown in the Company’s India operations. The backlog
ended the year at $19.8 million as of the fourth quarter versus
$21.9 million for the fourth quarter of 2019. The reduced backlog
reflects lower bookings in 2020 largely from the avionics market
rapid decline and other related COVID-19 pandemic issues.
LGL’s operating income was $1.4 million compared to $3.4 million
for 2019 including stock-based compensation expenses of $790,000 in
2020 and $112,000 for 2019. LGL’s core operating income, which
excludes stock-based compensation, was $2.2 million versus $3.5
million from the prior year. This core operating income decline of
$1.3 million was due to decreased gross margin of 35.1% vs. 39.2%
in 2019, or a 4.1% decline. Gross margins were impacted by the
product sales mix shift away from avionics, and from the COVID
shutdown of India requiring on-shoring to U.S. factories, resulting
in increased production costs. As LGL is an essential business, we
were required to maintain our production and operations, incurring
additional costs to preserve manufacturing capabilities. G&A
costs increased primarily due to a $678,000 increase in non-cash
stock-based compensation in the current year, partially offset by a
reduction in administrative costs.
Diluted loss per share during the fourth quarter was $0.02 per
share in 2020 compared to diluted earnings per share of $0.19 in
2019. The full year diluted earnings per share was $0.19 in 2020
and $1.41 in 2019. Included within 2019’s diluted earnings was $3.3
million, or $0.67 per diluted share, from the valuation allowance
reversal on our deferred tax assets. Weighted-average shares
outstanding for the year during 2020 were 5.22 million versus 4.98
million in 2019.
Balance Sheet
At December 31, 2020, the Company had $24.1 million of cash and
marketable securities. This compares to cash and marketable
securities of $18.1 million at December 31, 2019.
LGL’s balance sheet continued to improve in 2020 as a result of
generating cash from operations and raising $3.3 million from the
Company’s ATM Program in early 2020.
The Company’s investment in the Sponsor of the SPAC, LGL Systems
Acquisition Corp. (NYSE-DFNS), is expected to realize value for
shareholders. DFNS recently announced it has signed a business
combination agreement with IronNet Cybersecurity, Inc. (“IronNet”),
an innovative leader transforming cybersecurity through Collective
Defense. The combined company will be renamed “IronNet
Cybersecurity, Inc.” and will be listed on the NYSE American and
trade under the ticker symbol “IRNT”.
Warrant Dividend
Providing additional value to its shareholders, the Company’s
board of directors declared a dividend of warrants to purchase
shares of the Company’s common stock on October 27, 2020 to all of
its shareholders of record on November 9, 2020. The warrants are
publicly traded and details can be found on the Company’s website
or in SEC filings.
Management
The Company announced today that board member Mike Ferrantino
has been named its President and Chief Executive Officer, effective
April 1, 2021. Mr. Ferrantino has served on the Company’s board
since 2019.
Mr. Ferrantino brings significant experience in the company’s
products and end markets of aerospace and defense sector. “We are
delighted that Mike will lead the business. His depth of experience
brings benefits to LGL shareholders for the years ahead. We thank
Ivan Arteaga for his role as interim executive during this very
challenging year. Ivan navigated an unprecedented set of challenges
yet managed to improve the company’s positioning.” Marc Gabelli
commented.
Investor Conference Call
Management will host a conference call on Wednesday, March 24,
2021 at 11:00 am. ET to review strategic and M&A initiatives,
year-end 2020 financial results, and further developments in its
SPAC franchise.
Participants are invited to access the call by dialing (844)
401-3350 (United States) or (248) 847-2523 (international)
approximately fifteen minutes before the conference start time and
provide the conference ID 6347925.
Video or slides will be presented via WebEx, www.webex.com under
meeting ID 182 952 2973 and password KReAKceg266.
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 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.
Consolidated Statements of
Operations
(Dollars in Thousands, Except
Shares and Per Share Amounts)
Quarter ended
Fiscal Year ended
December 31,
December 31,
(Amounts in thousands, except share
amounts)
2020
2019
2020
2019
REVENUES
$
7,414
$
8,839
$
31,162
$
31,897
Costs and expenses:
Manufacturing cost of sales
4,552
5,411
20,233
19,381
Engineering, selling and
administrative
3,000
2,401
9,514
9,077
OPERATING INCOME
(138
)
1,027
1,415
3,439
Total other income (expense), net
93
117
(111
)
470
INCOME BEFORE INCOME TAXES
(45
)
1,144
1,304
3,909
Income tax provision (benefit)
54
179
336
(3,107
)
NET INCOME
$
(99
)
$
965
$
968
$
7,016
Weighted average number of shares used in
basic EPS calculation
5,214,928
4,917,854
5,173,430
4,883,923
Weighted average number of shares used in
diluted EPS calculation
5,266,049
4,978,336
5,216,859
4,977,595
BASIC NET INCOME PER COMMON SHARE
$
(0.02
)
$
0.20
$
0.19
$
1.44
DILUTED NET INCOME PER COMMON SHARE
$
(0.02
)
$
0.19
$
0.19
$
1.41
THE LGL GROUP, INC.
Condensed Consolidated Balance
Sheets
(Dollars in Thousands)
December 31, 2020
December 31, 2019
ASSETS
Cash and cash equivalents
$
18,331
$
12,453
Marketable securities
5,791
5,631
Accounts receivable, net
4,122
4,445
Inventories, net
5,280
6,016
Prepaid expenses and other current
assets
257
365
Total Current Assets
33,781
28,910
Property, plant, and equipment, net
2,785
2,831
Right-of-use lease asset
422
331
Equity investment in unconsolidated
subsidiary
3,072
3,334
Intangible assets, net
327
402
Deferred income taxes, net
3,052
3,307
Other assets, net
16
102
Total Assets
$
43,455
$
39,217
LIABILITIES AND STOCKHOLDERS' EQUITY
Total Current Liabilities
3,397
4,084
Long-Term Liabilities
293
240
Total Liabilities
3,690
4,324
Total Stockholders' Equity
39,765
34,893
Total Liabilities and Stockholders'
Equity
$
43,455
$
39,217
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 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 Income Before
Income Taxes to Non-GAAP Adjusted EBITDA:
Quarter ended
Fiscal Year ended
December 31,
December 31,
(Amounts in thousands, except share
amounts)
2020
2019
2020
2019
Net income before income taxes
$
(45
)
$
1,144
$
1,304
$
3,909
Interest expense (income)
4
(1
)
11
(2
)
Depreciation and amortization
136
128
528
493
Non-cash stock compensation
686
95
790
112
Investment income
(146
)
(147
)
(213
)
(493
)
Loss on equity investment in
unconsolidated subsidiary
62
16
262
16
Adjusted EBITDA
$
697
$
1,235
$
2,682
$
4,035
Basic per share information:
Weighted average shares outstanding
5,214,928
4,917,854
5,173,430
4,883,923
Adjusted EBITDA per share
$
0.13
$
0.25
$
0.52
$
0.83
Diluted per share information:
Weighted average shares outstanding
5,266,049
4,978,336
5,216,859
4,977,595
Adjusted EBITDA per share
$
0.13
$
0.25
$
0.51
$
0.81
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210324005340/en/
The LGL Group, Inc. Ivan Arteaga, (407) 298-2000 CEO
iarteaga@lglgroup.com or James Tivy, (407) 298-2000 CFO
jtivy@lglgroup.com
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