LGL - Earnings call transcript Q2 2019

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Operator

Good afternoon. My name is Prince and I will be your conference operator today. At this time, I would like to welcome everyone to the LGL Second Quarter 2019 Earnings Call. [Operator Instructions] After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]

you. Thank turn begin. to to CEO, Ferrantino, call may you the like Michael over Sr., I'd

Michael Ferrantino

Good everybody, we're you. shareholder like really reflected Thank the afternoon, share value. appreciate in. for in turn the We I'm calling announcer going attention this increasing that – getting. to it's and Hopefully, our thank – you going up said, going to for is try some review to financial any James you – numbers CFO questions back is have. of and you to to answer I'm then going and James Tivy, pick the that our

James? So,

James Tivy

afternoon, Thanks anticipate after will Good be Michael. our this our Thanks, call Please the call. we and on everyone. www.lglgroup.com making QX call. XXXX at earnings recorded this recording joining that note available for website

today a the results of issued reporting the fiscal release our XXXX. have closed press for market second quarter after We

underway, Before statements Form our note discussions in our the following we're advise participants the addition XXXX all recent to taken with should getting contained you to within that notes conjunction thereto most be required should XX-K and in and financial be contain to the Exchange statements with XX-Q XXXX of of most for XX-E Securities of the and Act meaning the XXA Act forward-looking Section of within XXXX. discussion This Section the recent quarter. and this of filed may SEC Securities

are involve These risks our in detailed which with and filings forward-looking SEC. uncertainties, known statements and the unknown

any reasonable implied are will forward-looking conditions, upon results that statements Although materially company's there assurances forward-looking or no by statements. assumptions its differ the be the business not expressed company's company that believes future from can based regarding the and market its results actual

statements result or revise update obligation no that performance. as statements, publicly any are are cautioned future otherwise. events not The guarantees forward-looking future information, whether new of company or any of forward-looking Readers undertakes to a

quarter the where Let of me as stands of summarize second XXXX. LGL

the compared and stronger increase million backlog XXXX. is increase coupled of company's June wins was XX.X which June design million, conditions. market XX, XX.X%, backlog as favorable of execution as So, of delivering order to an The of the with XXXX, our reflects XX.X

growth We backlog orders have been revenues, expected. being than due the sooner received and than faster to building our

three Revenues an of product June the XXXX June million for XX.X% $X.XXX from XX, revenues six XXXX or $XX.XXX were million XX.X% months increase the ended XXXX. ended $X.XXX revenues is categories. million increase million $X.XXX for of million, June the Total or ended were revenues from months XX, the Total three months $XX.XXX XX, six for which for an of all $X.XXX increased revenues across XX, XXXX. months ended June of million

margin, revenues, cost gross which reflects slightly of for of as to QX XX% XX.X% sales of a manufacturing XXXX. for less QX Consolidated percentage from XXXX consolidated decreased revenues

to gross consolidated from decrease a the date year our period, XX.X% as quarter. slightly the the shift to period. well This year prior for For product XX.X% reflects decreased shift margin during mix to in date

$XXX,XXX products, three of months $XXX,XXX in to for short-term. continues XXXX. XXXX Operating was of for the of long-term execute XX, an shift fluctuations but from margin company of still months there towards income operating mix XX, higher The income product the strategic ended June the $XXX,XXX ended three are June improvement its

margin XX, for from in $XXX,XXX due increase our primarily ended in for XXXX million of income in the income gross June improvement mix. ended operating an months Operating net XXXX. of from the of $X.XXX the was six changes This product months June $XXX,XXX XX, was reduction six revenues, of to

XX, three the for months primarily XXXX. ended $X.XXX to XXXX, compared revenues. XX, income compared for ended ended XXXX to And the for three months Net months $XXX,XXX, income six XX, was June June net ended our $XXX,XXX to $XXX,XXX XX, June for million, XXXX due the was June increased six the months

Basic months XX, and ended net and $X.XX $X.XX, respectively. respectively ended three XXXX for was XXXX income XX, and XXXX net XXXX and and and the was months share the $X.XX June six June $X.XX diluted per per income share for

consolidated June of was capital million, cash million XX, securities. $XX.X working As XXXX, marketable our $XX.X in with and

With now I'll over to Michael. turn call back that, the

Michael Ferrantino

Thank you, James.

pretty the about the pleased and So, third in we're pretty good and pleased management to – team middle it. second pretty is the of quarter actually we're feeling quarter hear, with the

So, without any up let's further it for ado, open questions.

Operator

question And Cassel Ian Instructions] MicroCapClub. first [Operator have Thank from you. from we our

Your line is open. now

Ian Cassel

and recent queue. and the the I'll progress. quarter come on jump few you're it has seeing few a is Thank just across and from the back you or from, of board? congratulations a the growth Where have in your questions the I it just customers

Michael Ferrantino

We're up the particular but board, had nothing million dollars. one seeing across tremendous were it's success it a of now we're over ago we've a few that doing OEM years – and with couple we almost

a it's yes. in real strategic on but So, customer, increase the a it's across some cases, board,

Ian Cassel

look where two-three a good indicator sort might the the amount production you're does that ago? engineering projects When of probably it, with. think I lead compare called that you not be in products, And of pipeline it Okay. How on is at working phase kind of was in that of kind today years maybe quite engineering to yet. you're

Michael Ferrantino

It's much ago, with not grown, different two three or than be more in it's To years not you, it complexity. it honest grown substantially. but is was

take that have complicated, would our more So, the but for number of engineering, I say on competitors. challenge projects are less now – we

defense parts I more term, much better for company to And longer be the so off will and strategy, for the industry. continuing do with was aerospace think complicated that

because have our in to if organic pipeline. seen will only engineers aggressive In plan customers recently more pretty got we with we be opportunities to right growth a – the many take that hire on grow have sustainable we've fact, of engineering that key to we now that, can more. addition And

Ian Cassel

competitors? as see that advantage what your you bidding When and do over of kind programs your you're of new Excellent. working on and

Michael Ferrantino

we our to pick able – parts beating that been our I tell market competitors. most competitors. working up they compared you share fail. We've our cases the some perhaps in general, in and quality clearly we're specifications our general, on best-in-class to to quality in don't And – is on because the of compared when closer to quality probably some don't come I say

there's little a bit of So, margin customers, our like for it. they and

I we're engineer. more approach – our much is engineer say So, would that in to we're robust to probably engineering

to of not call So, encourage engineer lines say of our company. communications the and open is in Sales engineer good but from we our the We want pretty Department, that. don't line them communications open to to

even pipe, us without circuitry, us the So he it's but that not when call though an will engineer has within talk problem, to and it's it. a about

Ian Cassel

looks for like opportunity many Thank then you? are question you color. of queue. or or the a for Okay. that merging in risk end getting back customers as do an get – Last acquired, you this I'll your see It

Michael Ferrantino

long recent? a United those I time takes probably talking It for think about Raytheon the you're and – most Technologies and

Ian Cassel

Yes.

Michael Ferrantino

how hard but to come It's – end. we're other we to level, Yes. the we're supplier of cases, supplier the a are In will out them. component I predict at because we're both it key say a both strategic won't

their a be they not two an probably or integrate Purchasing years. in whether because Departments, it'll we'll business, the by it's long-time see Now, increase time

backlog that and And don't I hopefully, on from programs our speaks they I near future increase that itself is in recent for think So, we'll for our most and evidence the like think see it. us. we're performance anything

Ian Cassel

yes, This well it's congratulations usually guys. earnings And, deserved. on again, quarter but Yes. great calls, overused is this time

Thank quarter. you. great So,

Michael Ferrantino

you Thank the questions. for welcome. You're

Operator

from MFH [Tom from is Investments]. MacIntyre question Next

Your line is now open.

Unidentified Analyst

is back I'll I've Yes. telling possibly it in Hi. now Thank following caused read many I'm last in I've call, this happen. couple your you've I'm figure announcements with June, many in a read can release alluded I've few seen seen that us. may but or out, been along – – that I've of and admit, to going to in for have I've things – I the I'm that and telling question. up obviously, getting you And with And and actual at anything you. wondering, something, early to here some times. answer. preparation can to if us perhaps transaction, that you my several terms there's what confusion. it that were way where of announce figure might and is be years, a gosh you just many, press as you're are must the what shareholder memo if LGL I for a you darn out I'm trying a nothing but And question

Michael Ferrantino

the... You're – referencing in talking about

Unidentified Analyst

why wondering you you of The do do that might – to this had last they like to to of this why they they out various and efforts release question LGL up ways except or have good I'm I'm Yes. in when aerospace defense press – the refer might nothing industries, structures the at follow something you And kind just you put that. to where some point. announce saying, might do expand

a I'm get I've to but put – to – one out I'm you out trying you're So, this, I'm what to at. perhaps and been I'm to getting by the as that's trying trying reason confused figure only it some – for guidance

Michael Ferrantino

you we SPEC? a press release were when the we specifically that to are sponsoring talked referring about Tom, –

Unidentified Analyst

got release, sudden, success that, minds hasn't mind months my balance but been you took two so mean quarter, a you trying and caught, obviously the what your out of they verticals by now away, people and press anything stuff frankly, anything is was some it's you they just, gibberish might various their and do release as or of release, might bothering the off what's like of you and so from to Yes, in mean, or much to that there industry, expand but headline out, sheet. last to out was what shareholder in – well. and X weren't think, well, press might it's which your Is the that was mean the and like quarter and in and something used all wouldn't then not progressed which threw it to there. efforts will this, me hopefully and LGL in a your figure for put it. reference might June say I I'm in went I'm you in the special? A&D works, something and lot SPEC, about to ready a your I defense balance it made then value referred not But intimating this

to for press release So, maybe it give I'm the asking, now was on here, that color put and minds? I'm you'd what's us what reason your you some do why or out

Michael Ferrantino

caused it your part, it. take on understand. at I'm Well, but stab confusion I'll sorry a I

and is that position our balance cash know strong. sheet You quite pretty our strong is

Unidentified Analyst

your some it's stronger. today after release I read numbers and gotten just Yes.

Michael Ferrantino

Right. we can make. that until the And way hopefully, investment it right will continue find to

goes think LGL not. going even roots. a our about talk believe me, long in than industrial defense when to trying it time, had back And or it [indiscernible] aerospace to were was, positions we I that it and think telecommunications, Systems. I older both in back even

So, what synergistic at and PTF. to and acquisitions say we We're were I subsidiaries think to continue not have MtronPTI current we to though is just that, we're look even on that we defense ourselves now, the and bolt that. on aerospace to that can focused trying we limiting

We're but don't so trying because should going it I'm stock shareholder at the I increase up, that where day, expand pretty we end happy the it's I'm exorbitant be. that value. it of the can not think to is

world-class think get, business. we've and our we just our I revenue can to not now until eyes I our for right up think said, the so, are components limit ourselves That higher, a even gross opened components. let's margins And electronic little

there's can trying I more do it. we're was fact, that nothing in right the essence announce. so, but that now, to than And of And

Unidentified Analyst

dissipates with was don't enough say back little for what some other I Yes. uncomfortable take been here while of seen and actually the although to decade, in is a to terms I when I've part isn't helpful have have I just several of, better, well to. in reasons get over versions all take a and strategies just far press of is we gets go That started committees lower actually this, where release. is, the all it are formed it than end a actually shareholder perhaps and kind or know been I for ideas try things somewhat a employed I various that created then are guess history and because will at special I stock of referred kinds the of you're one or over over you on decade out. you the and just getting, the you groups And drama of

– of were rights, the that we I'm talking a was were some walk that confused and kind wild and side times about operationally we're now I take a having little we were So, again on ready better mergers. that getting some there to the

is as talking that I was things were and what better were currently If been you you've drama, long that been I you balance of say, guess ready of on. be you be has I'm you have, periods around you're as veering as strong, us. sheet, and you not might about, just but might several off tell that are, to – the I guess there course I worried getting, now you're And your that

Michael Ferrantino

no. no, We're expanding No, it.

just principal our markets, defense still it is think focus going limit component but and I to not to aerospace we're a level.

Unidentified Analyst

of looking lot at to just buzz little and was and taken Like it there said, was options a made I'm and press that was words it because off think Okay. a release, yet it nothing announce. I a I I

And me – and around getting seen been I actually can I well, time, so press what nervous what is afraid this getting didn't to was is do saying what poorly I'm a company I'm was maybe, what do you. I've release I made know I've at, say? and long then that the that

Michael Ferrantino

you, helped I've hope I Tom. Well,

Unidentified Analyst

Thank you. Yes.

Michael Ferrantino

for the question. Thanks

Operator

Private [Operator Investor. question from Instructions] a is Next Lu, Michael

Your line is now open.

Unidentified Analyst

Thanks great the want my call. on quarter. say Hi. to for taking congratulations I

current engineers, I about of you of to some more your first – given one talked expect if I had have reach when couple more My can more? so range do facilities hired you revenues revenue currently rise and few like terms a the to you'll quarters, the in questions. when that start you last maybe recent So, more expand could spend give and to have us those, in where specific you when spending to support would production? but capacity know you is,

Michael Ferrantino

Michael, talked, couple we long haven't time Hi, of weeks.

Unidentified Analyst

Yes.

Michael Ferrantino

it's way. in see shift. fact, time have second and can a to of we time put to capacity address not if lot space. recently a part try it really I infinity, a on I'm And me a We going point Let for say most have view, this plant we've do. From full we of floor shift, a with but

will going the bring and in people. enough it get X%, we increase we think I again what be it's we'll do to existing be. good would equipment modeling with And – probably that's expect once the our X% X%, that suggest line probably to can more revenues I to with backlog

million What wanted on a also what hours. than, wants and amongst that And as we do ourselves talk we over to a about that he to here is we're working million, us, place to refer if customer a for us, came $X lot and lot are time, now, using and $X write-up delivery people that quicker say, everything let's normal. a we surge of be along a

to the – So, getting them the we've last pretty clear in get, been XX successful hard added especially people we've days. XXX But cleared. getting resources, to and

is So, week, it's on to from to hours hours able let's But in maybe a ship, million what week. to a away we're over selected working X XX be to, cases. XX-hour trying say, to $X time people XX get do

So, we've needed to get level with in all loaded do able to to case time able more factory and we be to be the that the it. to then

all up labor it bought take let's not a even to have trying equipment okay, So, that allow to specialized is what did. use We've our in few – will coming to let's down. get we and more increase let's and say, we're us some pieces do capacity, some

do semi-automate at equipment So, productivity. piece take can or to a how and with increase new jigs looking of fixtures we either we're always an

see the we've we're in together, know the I going $X an of in can factory. awful – you to up it weeks, we That's quarter, to that XX and coming but we compare fact don't So, and this able almost it's parts a go all million first did. through lot revenue. it

don't I be. comfortable to to like on need pretty where we're But more I'm could to close people pretty building. facilities, think backlog we we're I in get this bringing I'd People constantly that so, And – another line.

Unidentified Analyst

Okay.

Michael Ferrantino

know, able this surge could the make using wanted go event Long I we in the and lots fact wanted I to answer, of run the to overtime we through that wanted to be without revenue. factory ability the but we to to

Unidentified Analyst

And it would when new a want? Yes. you'd That's there would guess when that of really time they production sounds a of good you hiring between to I full and like of engineer level matter Is time engineers. then or hear. it's just training lead some reach your sort actually, hire more a

Michael Ferrantino

categories. break into Let's it different

But school I'm so have really For we takes time. we telling to are of what it's that X long because even hit XX, try XX a to they're need ground months an the hitting engineer out ground we'd have experienced and running, do. right running them you – that years people few we a probably they X before coming and can to the doing really like

getting experienced get and of we this going case least area, that takes they can because hire at people, Most that unique XX of is to part clearance the screened the to people alone. some be technicians, at we're cleared, experience. in level days try but not sure secret make we to be In with it

But not will that ultimately, on on want kind it for we depends that them anything job. So, incubation of working they're they the period. that

curb we The them actually or brought beside let's a think. we an assembly training, people, gets lot I And doing lot lead professional, that actually trainer, trainer, a that's the experienced operator, assembly more on of the we're instead you call board them – classes, but so the have a quicker. [indiscernible] watching up the not it

it's investment, working So, It too. for was that paying but off. been think an us I part's

Unidentified Analyst

your then curious different And note, I'm about on a Thanks. also margins. Okay.

and going like your margin, gross in margins quarter I long-term? at where margin your seems wondering, are normalized reached up especially gross the the do in is constantly as it scale margins you said. facilities see really once you incredible you of this maybe too last terms bottom line was So,

Michael Ferrantino

line numbers are it's business, because we buy of that and reason much business we like I a and our falls XX's to low think bottom those you and is it. at it the good at than a is high what some look that we the resell Well, of mix margin think but margin if the I lower the engineer, because

So, if is it's is going that and the mix up mix changing. that reason

we are replace design as and compression price we it buy on impacts and filter are the the design price. we a around spectrum we it, drop we dropping say, with, a We – a that resell – when control product it us, let's it

our so, that of we And going with can't we're that the production modeling job. in pass says to margin, out if probably gross box on then come XX%

doesn't because first that jobs, a want life and for of mean run, we're the Now, learning going the you're year second XX% these OEMs big years. price beat to after that usually X% some of the down us okay, reduction it's curve, production say, some first and back come up make our XX-year we of or a and few for

I product of going is? you we that well few idea composition XX%. for give a how about that years for knowing the is that So, be to in design what we some a general, XX% and go would it say within Does

Unidentified Analyst

mentioned think you good – before And you information. still… you're I some business have That's Telecom used know I Thanks. that Yes. Legacy you to

Michael Ferrantino

right. Yes, lot we distributor. it's talking the really act and resell, Michael, a as – about. that's a handling, buy I'm almost Yes. much don't not do where there's That's we but what

Unidentified Analyst

see. I Okay,

grow business the that'll to aerospace goal now So, [indiscernible]. the and main is

Michael Ferrantino

products the less engineered been with highly That's competition. since goal XXXX,

Unidentified Analyst

very far. you've well like that And on seems definitely so goal executed Yes. you've

if visibility what great Because as picture, opinion, one could more now What seems just very So, and now question, your in see future. like personal yes, it going that have you – business? kind I biggest maybe in everything the the do just darken of have right you for will? you worry you really but the good is for

Michael Ferrantino

no to a I thing now. a major of on up There's a night. right one there's gone of value, whole that me thing is I that don't share things competitor our account. do And think bunch time. it. foolish reflective work because all the into have that little are But that at especially at something do any I'd for price after still that's and wakes we watch the lose one hate our a all not there's think up keeps hard me night

in I rewarded had a should. share feel as quarter. it's don't made pain when And, think to a I'm a reflected this want like price. I we large quarters, don't think our lost be much in ago years in why neck, money And but that's getting the that we few as we where way. I I don't we're we shareholder,

Unidentified Analyst

Yes.

you. Well, Alright. Thanks call. my Yes. for That's thank all sure. with questions. For taking my

Michael Ferrantino

You're welcome, Michael.

Operator

Instructions] We question have from up Cassel a follow MicroCapClub. Ian from [Operator

Your line is now open.

Ian Cassel

last I of one done you've company approximate I'm you're of in a kind maybe I know just you're new the the great CEO had for attributes curious of that? looking leader question, involved the think I a what Unfortunately, next just timing search. in job, and now Michael.

Michael Ferrantino

who'll kidding for anything the what from somebody aside, to to doing M&A here. I've agree doing some change consequences. a life somebody spend that that's we're got major can Someone thing, exactly many of next come No, external all looking experience built-in of and activity, and an level, his rest and us Not not take the been do that.

modern we us we a that techniques. still view, ring out manufacturing can And mean some I plant – people the from to jigs I help and the we Somebody the don't equipment still point of have. beat of and I fixtures and more can and with mean them, more even think

a and next the not for have take being worry and the in looking who to to foxhole, but company senior about fellow level. �� really the take come can we're So, in

Ian Cassel

Okay. you. Thank

Operator

the no showing I'm turn Instructions] I'd questions. to [Operator back over. like further call

Michael Ferrantino

Buy a look forward the in Thank again you all to and talking for Thanks guess it lot. stock. you appreciate participating. November. sometime, really I I to

Operator

you your This participation. concludes for Thank today’s call. conference

disconnect. You may now

Michael Ferrantino	Chief Executive Officer
James Tivy	Chief Financial Officer
Ian Cassel	MicroCapClub

The LGL Group, Inc. (LGL) 11 Aug 192019 Q2 Earnings call transcript