LGL - Earnings call transcript Q4 2020

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James Tivy

Good morning, everyone. I am James Tivy, CFO of The LGL Group, Inc. Thank you everyone for joining our Full Year 2020 Earnings Call. Please note this call will be recorded and we anticipate making the recording available on our website at www.lglgroup.com sometime after the call. We've issued a press release reporting results for our fourth fiscal quarter and our full year of 2020.

financial required the you taken XXXX following with the most of we're should all in couple XX-K underway, there next most the that notes recent with note discussion recent for to getting be to within the and advise participants conjunction too, filed Before contained and SEC our this statements days. should in be period of of XXXX forward-looking contain within meaning the statements the Securities XXA and XXXX. Act Section This Act discussion may Securities and of the of XX-E of Section Exchange These uncertainties, forward-looking with in statements the involve are filings known and unknown risks our which and SEC. detailed

undertakes statements. Although Readers statements result revise business that actual guarantees results the whether based its and are performance. forward-looking future forward-looking from statements, statements will not The company's market the of company's are differ can future its results by company the assurances or obligation information, implied company believes materially or update any expressed future to conditions, or forward-looking forward-looking any no cautioned that regarding upon new events reasonable a publicly any assumptions as not no of are there that otherwise. be

Marc Gabelli

Thank you, James.

LGL. manufacture of begin precision the designs New used XXXX forms and and its a We'll and that's today of York Stock MTronPTI, LGL avionics control the now corporate moment. company we business Today robust under in in on about principal just trades corporate further And called and symbol engineered Exchange. the operating can of it in communications of what the that The its in subsidiary frequency talk with will various medical profile, a highlights the basic founded a was devices. went for engaged company is was We on review Group. in of snapshot XXXX public American some the Curb Exchange

X.X million $XX.X $X.XX year a Cybersecurity. Corp.LGL LGL to million IronNet on slide $XX million, turn Group Acquisition combination recommend XX, shares It in IronNet more a securities. would as with XX website across was a of into The revenue, $XX.X invested a X. continue Acquisition further March Systems of company at Corp information outstanding marketable as Systems announced completed to SPAC, shareholders and both Acquisition on We verticals. slide, bit cash multiple gross LGL business a is million merger December annual website the basis Systems that of XXXX; look million of addition the the for filings. the to sponsor and SEC with of intention We'll to with As sponsorships LGL well about next SPAC in we If moment. participate talk to in industry Corp And, a

underscore to look at this to team during want use and As challenging on opportunity deep we XXXX, Group delivered LGL be a who thanks the our continues stakeholders backdrop. back customers a to for all to and and is what businesses we the professionals subsidiary

strong LGL the risks. release, the back within we'll you've as for and suppliers. entire the At much supply time industry and defense footprint space the customers And across and on precipitous bit a manufacturing mix a in oriented towards that moment. about decline the COVID-XX As in Group aerospace had the chain caused really shifts talk XXXX had and of the disruptions the avionics the reflect COVID-XX technologies. XXXX its fundamental underlying a in results same press significant seen of business customer year very medical

million adjust for and which reflected Orlando and and most by quite The we to was led that as the thank is it Kong So outlined, sheet a and efforts management as bit. the And their MTronPTI million essential margins robust Yankton, discipline in Bill; we and Drafts look key to again revenue all LGL Bill just to really we for balance the stakeholders. $XX.X And team the for changed. behalf thank operating results the environment reported XXXX. strength was business. full good for deliver year increase was Group's of and company The our are team sheet. $XX.X that balance the India, LGL in in Group actually his changed for it's LGL important clients versus is strong on his in in an ways We think continue the of being Hong Orlando, businesses Group we continued

by India a our shutdowns Because COVID-XX critical of request ventilators, component so during pandemic. all aware facility. us shutdown the Health the MTronPTI device produces reopen Electric very COVID-XX was acutely during reopened Noida, in facility was helped mandate critical GE a for was which example, government India facility For are we which General at the the Health

of a look which filings. the the been helps a of Michael today subsequent business very has that to place event named who XXXX, CEO. is SEC deploy we've In dynamics. deliver shareholders CEO, broad and capital, Ferrantino as value again, and the capital most warrant to the of think our for excitingly, of you as forward. President combination business that time. with that's we're we return of also, dividend Also There's SPAC really distribution that benefits replaces And and then, LGL residual Interim Michael the shareholders XXXX, set strong website continued earn of COVID-XX on we Group. and continued shareholder LGL announced Arteaga, way information have in recent in The our dividends; during on message can period and Ivan for as a Cybersecurity to announced Systems we in IronNet find good So a proud steward issued during that record on we warrant is the

Ivan Ivan for we remains of behalf shareholders on this LGL So on of during board efforts Group. thank the his time,

slide. next the turn Let's

further new many then both we business, at which on can Group graphical the a can of if deal focus the SPAC and of to we strong. deploy a overall our mergers shareholders and dynamic, have the as business. discussed looking value to LGL for been to about years, on acquisitions. is and the of operating we've see also that added company through very M&A have its as We initiatives the were think LGL another over like group resources, resources cash believes We've, new LGL The excellence. on actively generation, initiatives, and session. talents and flow and we We're just prudent. capitalize But various talk capital So ultimately time will Group would strength. shareholders talk We'll an on that strong, some calls know, bit for ability in continues and efficiencies strength and looking just about of to you Group, that about drivers the harvest to access be back benefit is relationships, We its continue SPAC that.

So to we IronNet approach to filings SPAC adaptable that we will And intend issue road can to in sponsor. confident And transaction. have do the with we reflected various further that be that And market and forward and we're in the future look vigor. we process ahead. as we conditions

is slide slide Next X.

the opportunities lift well with expect at benefited we we flow businesses synergistic us franchise. operating SPAC to transact ability for significant coming through benefits in M&A The that expand through outs. residual from look opportunities do prudent, to niche as embedded forward, grow look we the of deal to on as we're have and franchise both Again, but areas protected characteristics. some tuck-ins, organically So that's in

looking the at value That deliver will to up as what customer of call chain continue itself broadening existing So our the franchise to business. which set the not customer, Group. varied, lends LGL necessarily to for the we be

history. a adding see diversified, value holding our you of its some website, If to company time It's look its subsidiaries. at you'll over

And an excited from to which as also market continue trading SPAC is network the this stock for SPAC, believe management on capital I will shareholders, an across verticals, flow the deal We effects. on the within dynamic team. the its investment markets SPAC that general the both as benefits residual mentioned, and itself, continue. the that across as instrument the operates and is company and The both but expertise opportunity itself we're the a come SPAC several

James Tivy

is James. Marc. This Hey,

interrupt Michelle, are operator. folks I not to they're indicating on wanted the having with hearing there? can We're it. just call. of the to we you a couple double Sorry check if

Marc Gabelli

we connection, lost Maybe James.

James Tivy

suspect have may just WebEx in not I dial the they dialed and number. into the

Marc Gabelli

So this being this do is believe I being recorded right recorded. is that now. still

Operator

is correct. not Mr. You lost, Marc are sir.

portion have might the dial only. participants WebEx of the to Some call

Marc Gabelli

see. I

So voice. the they Is cannot that hear right?

Operator

sir. part, dial audio have the They is here. to This

Marc Gabelli

Okay.

you're going that out So just the are had need we James. shareholders. cut on to We we've operator, But recorded this operator, section continue, message. only for for that those banter apologize. the call And are our can the this to that

Okay?

Operator

inform will post the I conference sir. services. Sure,

Marc Gabelli

Thank you.

to efficient mechanism that James, I confusing. on slide to may at we're So way their have been dial time. It's to let an to if shareholders a apologize do X. don't But them know release fully this they what certain you press number, a have need understandable. have

James Tivy

either. Yes, don't I

Marc Gabelli

Okay, SPAC, we We were relationships so effects let's from off and leaving for continue on the slide on X. all benefits table. to that the the bring coming the the network

on now to President, pass the and I new And operating move Michael Ferrantino. Let to us our CEO business. this

Michael Ferrantino

PTF Marc to levels. like MTronPTI Marc. the all for teams related XXXX brief we're to echo of handled hard overview last you, keep close to I'd and of like and and revenues both work Thank I'd give year, COVID-XX challenges MTronPTI thank many a the and they able the to first their to

Next slide, Thank please. X Slide please. you.

opportunity see in the defense landscape. MTronPTI significant So

place markets. our and on and and result, in and a focus become components engineered spectrum a supplier markets solutions has team space critical our is avionics, ruggedized As highly used value custom aerospace the These military, control capable providing. of to been of the frequency modules high preferred

Next slide please.

are provider. we So a

sensitivity not could end Tier X, of small to and modules Tier provider we I mentioned. in X a much offerings the deal just are is to There of price but price system and modules where We components variations the do mean a us. lower in these where great

a manufacturing XXX,XXX please. with space design locations and company with and global India. slide, Next square of in feet US MTronPTI the is

has over Europe addition, spread through America, and company the of a In Asia. sales North XX primarily network reps

into to to markets, COVID-XX, expanding despite of year effects made share reach Investments was design not drive release to new XXXX be the several only went led of customers This improvements. including continue wins products, our yield and automation through expanding but customer existing our many new profitability slide; gains base. end market a and also positives, the Next key to ones. in with

business. our A our due week primarily margins, avionics chain, COVID-XX, operation, and need to new have disruptions negative a India are gross We to production our promote our on supply which shutdown to to products did marketing decline created also the in back however, and workforce six capabilities. enhancing our of the in efforts a US. at impact our shift

phase forward, slide; for both new new Next products form our help developing within growth These lower products new we our blue market smaller factors, customers such and of chip noise. medical levels in gain client integration opportunities share and functionality, areas higher including will opportunities existing areas in look existing driven space. frequencies grow and we and us as as need by technologies and see and higher base,

both us lower will our products. to capacity sales -- continue capabilities will performing and in we'll allow with higher international invest We which where to cost expand

to needs. technical With acquisitions customer to Linda. over continue support to the for that, will turn and further both of product We capabilities look like our synergistic I'd to call

Linda Biles

million A our million decline $XX.X or revenue revenues of X.X%. Our $XX.X XXXX versus annual $X.X were in -- million.

market, As in space, increased successful defense mentioned its company offset market. were with being the to able and previously, in team decline and revenues medical the avionics the in the

in able us were margins And we that in declined shutdown Our gross this to onshoring mid-XXs. XX% historic to in India. XXXX, gross are the with the XXXX, as in do US from of the shifted to the strong XX.X% margins the returning to back facility we our

XXXX, in strong backlog, like When decreased our X.X% our turn XXXX. to I'd from it X and it $XX.X XXXX Our XXXX. backlog million in adjusted look you. Mike, we at where was $XX. into in steady back going to to remains million EBITDA

Unidentified Company Representative

Linda. you, Thank

The and am it confidence, I Let shareholders me be part forward by this new the company's thanking and role. know strong future. conclude opportunity who LGL lead first vote of for that continue them to the will I in is directors the the to team proud of for serving let look into their

We continued development gains, will and share market to diversify strive and product mergers for growth and acquisitions through expand.

open open as look growth well Operator, like alternative As the strengths. to key please to questions. now for of to floor I'd the using areas floor our questions.

Operator

[Operator Private first from comes question Instructions] from Dobb Your Investor.

Unidentified Analyst

the relates magnitude how question us Hey, potential are you Could the had I investment? the of doing a I about that meaningful any parameters put franchise in and think as to to good of all. deal to terms business. IronNet how around to ones kind some relative SPAC give of morning, meaningful is the you call. kind forward appreciate and going something

James Tivy

some Sure, thanks had We listen for to line; with able thanks. investors the And in. your some question. problems weren't

A I'm that SPAC you the value listen to was glad have meaning, fullness in economic With warrants, That able dial Group business the combination expected voted SPAC familiar to until shares are There shareholders. regards not July. you're business at IronNet were the $XX occurs a we're is to sure That's SPAC convert the with conversion to per franchise completed on in and is by the when participation transaction, the the LGL the that the in announced. So invested shares. as presentation. of that also sponsorship both had SPAC B that in combination therefore, trust share.

doesn't and and will you million, conditions the time. condition transactions, IronNet, see So for investment, SPAC in private liquidity What's $XXX is investment there equal raised cash which close. which incur of to multiple actual in the is that IronNet these are unique the market. transactions until minimum also PIPE, terms the to about the transaction various the the

$XX The already economic the pro of without group. context There will that benefits we pattern economic as be potential has value range share, that The for economic warrant that financing of its conditions the has the that value transaction the the transaction in and Not of for the benefit LGL sponsor close to view in to the participants full appreciate trading a and to tied course LGL economic price is But variability $XX therefore, is IronNet to the SPAC this So, at partnership. to the directly sponsor, just value million can of met forma share about including the without participation LGL within Group. a to including stock.

additional have And a $X.X initially the any on pro number that's million a forma or initial the after will other investments not is do including may LGL net company also it So with done, that invested. Group basis.

differentiated on vary. And math SPAC the have for without though, on the appreciation, that multiplier, $XX So return certainly just price sponsorship the rough trust multiplier, will a share each will IronNet account a profile. But assuming itself.

items a So that's holding lot of static.

already You can kind of roughly assume that XX plus to invested. X.XX

XX net. fluctuation. on that's of can a and north there that again, course that So of roughly upside based of around stock can to be XX downside And gross on price also basis, there kind be

that So answers I hope your question.

on. in for for seen well listen opportunities transactions just will outlined, out the has that that we've to had And they've attributes for IronNet excess call the continue We a course, mind, have the you pursue cap closer of fit as those would pro all in a to for Group And of residual more. opportunities any Certainly $X its forma be flow for set. keep which criteria in would related or the the to much billion transact of SPAC, benefits the smaller build outlined cybersecurity able around SPAC. team of to the IronNet and were SPAC to those investors, transactions LGL management of of XXX them the be and to shareholders IronNet

question. Thank for So you I that next helps question. hope with the Operator, it.

Operator

Your of from MFF. next comes question Tom

Unidentified Analyst

explain just but going their also LGL be in the to understanding had forward. investment Am morning. -- warrants. involved you heard understood we're one that Good answer My attribute totem we presentation, of an exercisable mentioned lower had Because only your in on SPAC that that not the current how invested Can was your just pole Yes. currently to do $XX until as the mistaken you of I pillars risk. look question My that is has as terms in you're never I you the company the alluded you more any how otherwise only XX.X. And know think that value that because than are I with concerned? taking, itself, there in, just at the in do as to warrants in actual that? to warrants rather you as far to, do how $XX you value we're because facet we which future, SPAC investment wouldn't SPAC the the at the quite I million the on seems

James Tivy

Yes, question. Tom, the for No. thanks

SPAC sponsor B restricted. the that is SPAC there's So plus non binary announced. thing and up which to to are also which And includes that XX invested not warrants. the or deal if the first both either SPAC, The it Group But is risk, tradable a includes the LGL the shares sponsor, have in zero

Group which which So The the the point to have sponsor that incentives all invested investment just a Group team of for is SPAC. in day-to-day sponsor, plus in only clarification, attribution the in warrants. LGL broadly, took involved both to in those on designed seeking the the direct its risk to the invest folks for includes are ultimately, LGL not did the But capital. opportunity

And see partnership, wrapped a what you interest it's accounting. can in the results it's under in. Okay, variable the all financial that's

expense accounting. if variable that GAAP, haircut up Group takes LGL but an not we it's due interest the to in entity EBITDA economic a when results, perspective, through from an follow expense, Group. reported flows The the LGL shows example, has For the it to an It's

calendars as in should really we registrations, and topic. XXXX not capital very opportunities and the phenomenon, with it but further in have to to for only markets. public. we to can in interest SPAC offer raise you traditional Because SPAC which intends of this low the SPAC the a our for terms you companies been sponsors, have SPAC capital. all will SPAC, we're that, listings Group there have a as to investors is going SPAC in several in do this very In think the help because go obviously of the investment, invest seeing looking market. detail around, features year actual besides further seek liquidity go LGL you're do, think now for you the obviously sorry, that call several future which rates as direct also have have and are around that companies, that then We public separate But phenomenon, mark its IPOs, public, company growth, strong business

So also best we in the Tom, is do the on flow can in that requisite capital rewards. markets, take also identify risk fashion capital, we've sponsor, on which therefore mitigate wholly transact but to team is plan combination, to obviously, SPAC, that mechanism invest do business to partnerships, continue in ensure that wholly risk just dependent And the sets. management the all on the with the dependent and have to but a and relationship deal the outlined,

certainly and forward opportunity Group that good The shareholders. for a for hopes, that LGL relationship sets that bringing So of quite believes question. answer your lot it's I hope

Unidentified Analyst

had I point, new to understand have XX.X had And terms. road value Yes, above we couldn't to at and those the some that's company down helpful. just I on LGL. the warrants thought invest why the would we get to

sheet, LGL you if $XX is at the said in $XX on trade saying starts. I what is in company million share about the presentation, when were a think is at helpful. moment of essentially plus that, explanation economic today's as $XX and it And new the $XX to million very your interest you're balance So cash

of million that the well those things? $XX -- as way you're alone as Is at that just figures obvious looking approaching business a that. that's So of two running

James Tivy

add then continues, we that continue in some That's companies franchise haven't discussed also companies bring continue. you we you, is those a And will And believe the NOLS have correct. there SPAC value There's to to today. market to operator. ultimately the opportunity process. Thank and that real help to as

Operator

participants questions from online. you no Sir, are continue. may There

Michael Ferrantino

And and participating there this thank The questions, no more continued everyone conclude for like if call. would interest to your the Well, in are would LGL I Group.

Operator

that for does call gentlemen, today's conclude and you Thank Ladies conference participating.

disconnect. now line the on may You please your Speakers stay conference for call. post

The LGL Group, Inc. (LGL) 24 Mar 212020 Q4 Earnings call transcript