The LGL Group (LGL) Q4 2020 earnings summary

Executive summary

• FY2020 revenue fell 2.3% to $31.162M as lower avionics demand and COVID-related disruption were largely offset by defense/military and aerospace growth.

• Net income was $968K vs. $7.016M; the comparison was affected by a $3.344M tax valuation-allowance reversal in 2019, while lower revenue and margins and higher costs also reduced 2020 earnings.

• Cash and marketable securities totaled $24.1M at year-end, up from $18.1M; cash from operations was $3.192M.

Financial highlights

• Revenue was $31.162M vs. $31.897M; operating income was $1.415M vs. $3.439M, and gross margin was 35.1% vs. 39.2%.

• Adjusted EBITDA was $2.7M vs. $4.0M in 2019.

• Basic and diluted EPS were each $0.19, compared with $1.44 basic and $1.41 diluted in 2019.

• Cash provided by operating activities was $3.192M vs. $2.666M; year-end cash and cash equivalents were $18.331M vs. $12.453M.

• Year-end backlog was $19.801M, down 9.4% from $21.857M; management expected to fill substantially all of the 2020 backlog during 2021.

Outlook and guidance

• Management expected substantially all year-end 2020 backlog to be filled in 2021, while noting cancellations, deferrals and scope changes could affect fulfillment.

• Existing cash, marketable securities, operating cash flow and revolving-credit availability were expected to fund working capital and capital expenditures for the 12 months following the filing.

• COVID-19, supply-chain constraints, customer inspection and payment delays, and potential facility or workforce disruptions remained uncertainties for deliveries, revenue and cash flow.