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The LGL Group Reports Third Quarter 2020 Results

·9 min read

The LGL Group, Inc. (NYSE American: LGL) (the "Company" or "LGL"), announced its financial results for the three and nine months ended September 30, 2020.

  • Revenues of $8.1 million declined (6.0%) compared to Q3 2019 revenues of $8.6 million

  • Operating income was $0.7 million in Q3 2020 versus $1.1 million for the prior year period

  • Diluted net income of $0.12 per share compared to $0.91 per share ($0.24 per share excluding a $3.3 million tax benefit) for the prior year quarter

  • Order backlog was $21.5 million compared to $23.3 million at September 30, 2019

  • Adjusted EBITDA for Q3 2020 was $0.9 million compared to $1.3 million for Q3 2019

  • Warrant dividend declared October 29, 2020 providing shareholders’ efficient participation in future value.

The Company’s President and Chief Executive Officer, Ivan Arteaga, said, "I commend the team for pulling together as we worked through the spring COVID-19 shock, and ensuing summer impacts. While demand from the avionics industry has contracted significantly, the trajectory of the military/aerospace business is strong and growing. Recent orders offer promise that we are getting back to normal."

Commenting on the Company’s Q3 2020 results, Bill Drafts, President and Chief Executive Officer of LGL’s main operating unit, MtronPTI, stated, "Our results improved sequentially quarter-to-quarter as the overall business environment began to stabilize and we could focus on the strategic actions previously planned. I would like to thank the team for their dedication and thank our customers for their continued business."

THIRD QUARTER RESULTS – In 2020, LGL’s third quarter revenues decreased $0.5 million, or 6.0%, to $8.1 million compared to $8.6 million for the corresponding quarter in 2019. Operating income declined to $0.7 million reflecting lower sales than prior year, although sales showed improvement over second quarter 2020 levels. Product mix changes and costs related to the avionics production work slowdown also contributed to the operating profit decline. Adjusted EBITDA was $0.9 million in the third quarter of 2020 versus $1.3 million in the third quarter of 2019.

EARNINGS PER SHARE – Diluted earnings per share from ongoing operations, during the third quarter were $0.12 per share in 2020 as compared to $0.91 per share in the third quarter of 2019. The decrease was largely attributable to the $3.3 million tax benefit in 2019 primarily due to release of the valuation allowance related to the Company’s U.S. deferred tax assets and also from the operating income impacts noted above. Weighted average shares outstanding at September 30, 2020 were 5.3 million versus 5.0 million at September 30, 2019.

BALANCE SHEET – LGL’s balance sheet continued to improve in 2020. The balance sheet reflects a net cash position including marketable securities of $22.9 million at September 30, 2020 compared to $18.1 million at December 31, 2019. The Company continues to explore growth organically and through diversified merger and acquisitions and believes the relationship with the SPAC has enhanced its strategic profile in this context.

OPERATING STATISTICS – As of September 30, 2020, the Company’s backlog decreased 7.9% to $21.5 million as compared to $23.3 million at September 30, 2019.

Our summary operating statistics are as follows:

Three months ended

September 30,

Change

(Amounts in millions, except book:bill)

2020

2019

$

%

Bookings (Sales)

$

7,031

$

7,391

$

(360

)

(4.9

%)

Shipments (Revenues)

$

8,071

$

8,588

$

(517

)

(6.0

%)

Book:Bill

0.871

0.861

0.011

1.2

%

Backlog

$

21,456

$

23,285

$

(1,829

)

(7.9

%)

Nine months ended

September 30,

Change

(Amounts in millions, except book:bill)

2020

2019

$

%

Bookings (Sales)

$

23,347

$

28,837

$

(5,490

)

(19.0

%)

Shipments (Revenues)

$

23,748

$

23,058

$

690

3.0

%

Book:Bill

0.983

1.251

(0.268

)

(21.4

%)

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.

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollars in Thousands, Except Share and Per Share Amounts)

For the Three Months Ended
September 30,

2020

2019

REVENUES

$

8,071

$

8,588

Costs and expenses:

Manufacturing cost of sales

5,203

5,049

Engineering, selling and administrative

2,159

2,417

OPERATING INCOME

709

1,122

Total other income (expense), net

91

82

INCOME BEFORE INCOME TAXES

800

1,204

Income tax expense (benefit)

171

(3,326

)

NET INCOME

$

629

$

4,530

Weighted average number of shares used in basic EPS calculation

5,212,652

4,901,698

BASIC NET INCOME PER COMMON SHARE

$

0.12

$

0.92

Weighted average number of shares used in diluted EPS calculation

5,251,078

4,965,808

DILUTED NET INCOME PER COMMON SHARE

$

0.12

$

0.91

For the Nine Months Ended
September 30,

2020

2019

REVENUES

$

23,748

$

23,058

Costs and expenses:

Manufacturing cost of sales

15,681

13,970

Engineering, selling and administrative

6,514

6,676

OPERATING INCOME

1,553

2,412

Total other income (expense), net

(204

)

353

INCOME BEFORE INCOME TAXES

1,349

2,765

Income tax expense (benefit)

282

(3,286

)

NET INCOME

$

1,067

$

6,051

Weighted average number of shares used in basic EPS calculation

5,159,452

4,872,461

BASIC NET INCOME PER COMMON SHARE

$

0.21

$

1.24

Weighted average number of shares used in diluted EPS calculation

5,195,754

4,965,989

DILUTED NET INCOME PER COMMON SHARE

$

0.21

$

1.22

THE LGL GROUP, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(Dollars in Thousands)

September 30,
2020

December 31,
2019

ASSETS

Cash and cash equivalents

$

17,276

$

12,453

Marketable securities

5,646

5,631

Accounts receivable, net

4,644

4,445

Inventories, net

5,430

6,016

Prepaid expenses and other current assets

268

365

Total Current Assets

33,264

28,910

Property, plant, and equipment, net

2,824

2,831

Equity investment in unconsolidated subsidiary

3,134

3,334

Deferred income taxes, net

3,046

3,307

Intangible assets, net

366

402

Right-of-use lease asset

452

331

Other assets

-

102

Total Assets

$

43,086

$

39,217

LIABILITIES AND STOCKHOLDERS' EQUITY

Total Current Liabilities

3,700

4,324

Total Stockholders' Equity

39,386

34,893

Total Liabilities and Stockholders' Equity

$

43,086

$

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, 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,

2020

2019

(000's, except share and per share amounts)

Net income before income taxes

$

800

$

1,204

Interest expense (income)

3

Depreciation and amortization

131

125

Non-cash stock compensation

57

5

Investment income

(124

)

(76

)

Loss on equity investment in unconsolidated subsidiary

61

Adjusted EBITDA

$

928

$

1,258

Basic per share information:

Weighted average shares outstanding

5,212,652

4,901,698

Adjusted EBITDA per share

$

0.18

$

0.26

Diluted per share information:

Weighted average shares outstanding

5,251,078

4,965,808

Adjusted EBITDA per share

$

0.18

$

0.25

For the Nine Months Ended
September 30,

2020

2019

(000's, except shares and per share amounts)

Net income before income taxes

$

1,349

$

2,765

Interest expense (income)

7

(1

)

Depreciation and amortization

392

365

Non-cash stock compensation

104

17

Investment income

(67

)

(346

)

Loss on equity investment in unconsolidated subsidiary

200

Adjusted EBITDA

$

1,985

$

2,800

Basic per share information:

Weighted average shares outstanding

5,159,452

4,872,461

Adjusted EBITDA per share

$

0.38

$

0.57

Diluted per share information:

Weighted average shares outstanding

5,195,754

4,965,989

Adjusted EBITDA per share

$

0.38

$

0.56

View source version on businesswire.com: https://www.businesswire.com/news/home/20201112005116/en/

Contacts

James Tivy
The LGL Group, Inc.
jtivy@lglgroup.com
(407) 298-2000