The LGL Group (LGL) Q4 2019 earnings summary

Executive summary

• 2019 revenue rose 28.3% to $31.897 million; net income increased to $7.016 million, including a $3.107 million income tax benefit. Adjusted EBITDA more than doubled.

• Operations continued shifting from commoditized components toward highly engineered, higher-margin products for aerospace, defense and space markets.

• Order backlog expanded 24.9% to $21.857 million, while book-to-bill improved despite higher throughput.

Financial highlights

• Revenue was $31.897 million, up 28.3% YoY; filter sales increased $4.230 million.

• Operating income rose to $3.439 million from $1.430 million; higher gross margin contribution was partly offset by $848,000 of increased operating expenses.

• Net income was $7.016 million vs. $1.405 million; the $3.107 million tax benefit primarily reflected a $3.344 million valuation-allowance reversal.

• Basic and diluted EPS were $1.44 and $1.41, respectively, compared with $0.30 and $0.29 in 2018.

Outlook and guidance

• Expected to fulfill the full $21.857 million year-end backlog during 2020, subject to cancellations, deferrals and scope changes; fulfillment timing is not assured.

• Existing cash and cash equivalents plus operating cash generation were expected to cover working capital and capital expenditures for 12 months after filing.

• Growth plans emphasize new products, broader technology and product reach, integrated assemblies, and higher-margin mil-aero and space opportunities.