The LGL Group, Inc. Reports Fourth Quarter and Full Fiscal Year 2023 Results
- Significant increases in total revenues and income from continuing operations for the fourth quarter and fiscal year 2023 compared to the previous year.
- Net income per diluted share improved for both periods.
- Successful separation from M-tron Industries, Inc. mentioned by the company.
- Plans to reinvest capital in aerospace and defense, consumer products, and industrial companies.
- Strong liquidity metrics with investments totaling $40.7 million.
- Consolidated results showed higher net income driven by increased investment income and gains, partially offset by lower sales and increased expenses.
- None.
Insights
The LGL Group's financial results for Q4 and the fiscal year 2023 indicate a notable turnaround, with total revenues and income from continuing operations before taxes showing significant improvement. This positive shift is a result of strategic decisions such as the divestiture of M-tron Industries, Inc. and a keen focus on investments yielding higher returns. The company's ability to maintain net income per diluted share at $0.02 for Q4 across both years, despite various market fluctuations, reflects a stable earnings capacity.
An increase in net investment income and net gains from the sale of investments highlights the company's adept capital allocation and investment strategies. The current ratio's increase from 67.0 to 87.7 signals a robust liquidity position, which is critical for future acquisitions or investments. Investors should note the company's agility in reducing operating expenses, as seen in the lower Engineering, selling and administrative costs, which directly contributes to the bottom line.
However, the decrease in net sales and income from discontinued operations raises questions about the company's core operational growth. While the financial engineering aspects are commendable, the long-term sustainability of the business will depend on its ability to generate and increase sales from its core businesses. The reported increase in income tax expense is also a factor to consider, as it may impact future net income.
LGL Group's financial results reflect a strategic pivot post the separation from M-tron Industries, Inc. The company's industry-agnostic approach, with an affinity for aerospace, defense, consumer products and industrial companies, positions it well to capitalize on diverse market opportunities. The emphasis on cash flow positive businesses with distinct competitive advantages is a prudent strategy that could lead to sustainable growth.
The company's investments, particularly in U.S. Treasury money market funds, have proven beneficial given the higher yields in 2023. This suggests a conservative investment approach during a period of market uncertainty, which may appeal to risk-averse investors. The reduction in operating expenses indicates a lean operational model, which could provide a competitive edge in a challenging economic environment.
For stakeholders, the significant increase in working capital and the current ratio are indicative of a strong balance sheet, which is essential for weathering economic downturns and pursuing growth initiatives. The company's ability to redeploy capital effectively will be critical in driving future revenue growth and market share expansion.
The increase in income tax expense for LGL Group reflects higher income from continuing operations, which is a double-edged sword. On one hand, it signifies the company's improved profitability; on the other, it points to a higher tax liability that could affect net income. The company's tax strategy should be closely monitored, as it will play a significant role in future earnings and cash flows available for reinvestment or distribution to shareholders.
Given the company's investment activities and the potential for acquisitions, understanding the tax implications of these moves is crucial. A well-structured tax strategy can enhance shareholder value by optimizing the tax burden and ensuring compliance with evolving tax regulations. Investors should consider the company's tax position as a key factor in evaluating its financial health and strategic direction.
Fourth Quarter 2023
Total revenues increased
$417,000 t o$995,000 for the three months ended December 31, 2023 from$578,000 for the three months ended December 31, 2022Income (loss) from continuing operations before income taxes and after non-controlling interests increased
$466,000 t o$303,000 for the three months ended December 31, 2023 from ($163,000) for the three months ended December 31, 2022Net income per diluted share remained flat at
$0.02 for the three months ended December 31, 2023 and 2022
Fiscal Year 2023
Total revenues increased
$6,357,000 t o$3,678,000 for the fiscal year ended December 31, 2023 from ($2,679,000) for the fiscal year ended December 31, 2022Income (loss) from continuing operations before income taxes and after non-controlling interests increased
$7,004,000 t o$598,000 for the fiscal year ended December 31, 2023 from ($6,406,000) for the fiscal year ended December 31, 2022Net income (loss) per diluted share increased
$0.61 t o$0.05 for the fiscal year ended December 31, 2023 from ($0.56) for the fiscal year ended December 31, 2022
Orlando, Florida--(Newsfile Corp. - April 1, 2024) - The LGL Group, Inc. (NYSE American: LGL) ("LGL," "LGL Group," or the "Company") announced today its financial results for the fourth quarter and full fiscal year ended December 31, 2023.
"Fiscal year 2023 was the first year post-separation of M-tron Industries, Inc. (NYSE: MPTI) and we are pleased with the value we delivered our shareholders through the spin-off," said Marc Gabelli, Chairman and Co-Chief Executive Officer.
Tim Foufas, Co-CEO, added, "We are continuing to evaluate opportunities where we can re-deploy our capital, either through wholly owned acquisitions or via controlled investments. While we are industry agnostic, we have an affinity towards aerospace and defense, consumer products, and industrial companies that are cash flow positive with distinct competitive advantages."
Liquidity
Our working capital metrics and ratios were as follows:
| As of December 31, | ||||||||
| (in thousands) | 2023 | 2022 | ||||||
| Current assets | $ | 41,566 | $ | 39,340 | ||||
| Less: Current liabilities | | 474 | 587 | |||||
| Working capital | $ | 41,092 | $ | 38,753 | ||||
| Current ratio | 87.7 | 67.0 | ||||||
As of December 31, 2023, LGL Group had investments (classified within Cash and cash equivalents and Marketable securities) with a fair value of
Consolidated Results
Fourth quarter 2023 net income available to LGL Group common shareholders was
a
$197,000 increase in Net investment income due to higher yields earned on the Company's Cash and cash equivalents, which are invested in U.S. Treasury money market funds, in 2023 than on the Company's investments in mutual funds in 2022;a
$298,000 increase in Net gains (losses) due to the sale of the Company's investment in IronNet, Inc. in Q4 2022 at a loss; anda
$111,000 decrease in Engineering, selling and administrative due to lower salaries, wages, and other compensation as well as professional services and other consulting fees in 2023 compared to 2022.
The increase was partially offset by:
a
$78,000 decrease in Net sales due to significant bookings in 2022 that were also delivered in 2022;a
$333,000 increase in Income tax expense (benefit) due to higher income from continuing operations in 2023; anda
$132,000 decrease in Income from discontinued operations, net of tax due to no discontinued operations in 2023 compared to the Separation of M-tron Industries, Inc. in 2022.
Fiscal year 2023 net income available to LGL Group common shareholders was
a
$1,153,000 increase in Net investment income due to higher yields earned on the Company's Cash and cash equivalents and Marketable securities in 2023 compared to 2022;a
$5,131,000 increase in Net gains (losses) due to the sales of investments in Marketable securities at a gain in 2023 compared to selling the Company's investment in IronNet, Inc. at a loss 2022; anda
$654,000 decrease in Engineering, selling and administrative due to lower salaries and wages, share-based compensation expense, and professional services and other consulting fees in 2023 compared to 2022.
The increase was partially offset by:
a
$1,830,000 increase in Income tax expense (benefit) due to higher income from continuing operations in 2022; anda
$1,913,000 decrease in Income from discontinued operations, net of tax due to no discontinued operations in 2023 compared to the Separation of M-tron Industries, Inc. in 2022.
About The LGL Group, Inc.
The LGL Group, Inc. ("LGL," "LGL Group," or the "Company") is a holding company engaged in services, merchant investment and manufacturing business activities. Precise Time and Frequency, LLC ("PTF") is a globally positioned producer of industrial Electronic Instruments and commercial products and services. Founded in 2002, PTF operates from our design and manufacturing facility in Wakefield, Massachusetts. Lynch Capital International LLC is focused on the development of value through investments.
LGL was incorporated in 1928 under the laws of the State of Indiana, and in 2007, the Company was reincorporated under the laws of the State of Delaware as The LGL Group, Inc. We maintain our executive offices at 2525 Shader Road, Orlando, Florida 32804. Our telephone number is (407) 298-2000. Our Internet address is www.lglgroup.com. LGL common stock and warrants are traded on the NYSE American ("NYSE") under the symbols "LGL" and "LGL WS", respectively.
LGL Group's business strategy is primarily focused on growth through expanding new and existing operations across diversified industries. The Company's engineering and design origins date back to the early 1900s. In 1917, Lynch Glass Machinery Company ("Lynch Glass"), the predecessor of LGL Group, was formed and emerged in the late 1920s as a successful manufacturer of glass-forming machinery. Lynch Glass was then renamed Lynch Corporation ("Lynch") and was incorporated in 1928 under the laws of the State of Indiana. In 1946, Lynch was listed on the "New York Curb Exchange," the predecessor to the NYSE American. The Company has a had a long history of owning and operating various business in the precision engineering, manufacturing, and services sectors.
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 21E 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.
###
Contact:
The LGL Group, Inc.
Christopher Nossokoff
(407) 298-2000
info@lglgroup.com
The LGL Group, Inc.
Consolidated Statements of Operations
(Unaudited)
| Three Months Ended December 31, | Fiscal Year Ended December 31, | |||||||||||||||
| (in thousands, except share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Revenues: | ||||||||||||||||
| Net sales | $ | 446 | $ | 524 | $ | 1,728 | $ | 1,655 | ||||||||
| Net investment income | 549 | 352 | 1,566 | 413 | ||||||||||||
| Net gains (losses) | | - | (298 | ) | 384 | (4,747 | ) | |||||||||
| Total revenues | 995 | 578 | 3,678 | (2,679 | ) | |||||||||||
| Expenses: | ||||||||||||||||
| Manufacturing cost of sales | 201 | 165 | 796 | 837 | ||||||||||||
| Engineering, selling and administrative | 465 | | 576 | 2,236 | 2,890 | |||||||||||
| Total expenses | 666 | | 741 | 3,032 | 3,727 | |||||||||||
| Income (loss) from continuing operations before income tax expense | 329 | (163 | ) | 646 | (6,406 | ) | ||||||||||
| Income tax expense (benefit) | 169 | (164 | ) | 301 | (1,529 | ) | ||||||||||
| Net income (loss) from continuing operations | 160 | 1 | 345 | (4,877 | ) | |||||||||||
| Income (loss) from discontinued operations, net of tax | - | 132 | (28 | ) | 1,885 | |||||||||||
| Net income (loss) | 160 | 133 | 317 | (2,992 | ) | |||||||||||
| Less: Net income attributable to non-controlling interests | 26 | - | 48 | - | ||||||||||||
| Net income (loss) attributable to LGL Group common stockholders | $ | 134 | $ | 133 | $ | 269 | $ | (2,992 | ) | |||||||
| Income (loss) per common share attributable to LGL Group common stockholders: | ||||||||||||||||
| Basic: | ||||||||||||||||
| Income (loss) from continuing operations | $ | 0.03 | $ | - | $ | 0.06 | $ | (0.91 | ) | |||||||
| Income (loss) from discontinued operations | - | 0.02 | (0.01 | ) | 0.35 | |||||||||||
| Net income (loss) attributable to LGL Group common | ||||||||||||||||
| stockholders | $ | 0.03 | $ | 0.02 | $ | 0.05 | $ | (0.56 | ) | |||||||
| Diluted: | ||||||||||||||||
| Income (loss) from continuing operations | $ | 0.02 | $ | - | $ | 0.06 | $ | (0.91 | ) | |||||||
| Income (loss) from discontinued operations | - | 0.02 | (0.01 | ) | 0.35 | |||||||||||
| Net income (loss) attributable to LGL Group common | ||||||||||||||||
| stockholders | $ | 0.02 | $ | 0.02 | $ | 0.05 | $ | (0.56 | ) | |||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 5,352,937 | 5,349,187 | 5,352,937 | 5,338,417 | ||||||||||||
| Diluted | 5,381,685 | 5,356,188 | 5,352,937 | 5,383,666 | ||||||||||||
The LGL Group, Inc.
Consolidated Balance Sheets
(Unaudited)
| (in thousands) | December 31, 2023 | December 31, 2022 | ||||||
| Assets: | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 40,711 | $ | 21,507 | ||||
| Marketable securities | 22 | 16,585 | ||||||
| Accounts receivable, net | 356 | 543 | ||||||
| Inventories, net | 204 | 265 | ||||||
| Prepaid expenses and other current assets | 273 | 440 | ||||||
| Total current assets | 41,566 | 39,340 | ||||||
| Property, plant, and equipment, net | - | 1 | ||||||
| Right-of-use lease asset | 75 | 132 | ||||||
| Intangible assets, net | 57 | 78 | ||||||
| Deferred income taxes, net | 152 | 234 | ||||||
| Total assets | $ | 41,850 | $ | 39,785 | ||||
| Liabilities: | ||||||||
| Total current liabilities | 474 | 587 | ||||||
| Non-current liabilities | 694 | 708 | ||||||
| Total liabilities | 1,168 | 1,295 | ||||||
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FAQ
What were the total revenues for the fourth quarter of 2023 for LGL Group, Inc. (NYSE American: LGL)?
Total revenues increased to $995,000 from $578,000 for the fourth quarter of 2022.
What was the net income per diluted share for the fiscal year 2023 for LGL Group, Inc. (NYSE American: LGL)?
Net income per diluted share increased to $0.05 from ($0.56) for the fiscal year 2022.
What were the working capital metrics for LGL Group, Inc. (NYSE American: LGL) as of December 31, 2023?
Working capital was $41,092, and the current ratio was 87.7 as of December 31, 2023.
What contributed to the increase in net income for the fourth quarter of 2023 for LGL Group, Inc. (NYSE American: LGL)?
The increase was primarily due to higher investment income, net gains, and decreased expenses, partially offset by lower sales and increased income tax expense.
How did the separation from M-tron Industries, Inc. impact LGL Group, Inc. (NYSE American: LGL)?
The company mentioned that fiscal year 2023 was the first year post-separation and highlighted the value delivered to shareholders through the spin-off.
What are the industries LGL Group, Inc. (NYSE American: LGL) considering for capital reinvestment?
The company is industry agnostic but has an affinity towards aerospace and defense, consumer products, and industrial companies with cash flow positivity and competitive advantages.
The LGL Group, Inc.
NYSE:LGLLGL RankingsLGL Latest NewsLGL Stock Data
31.97M
3.36M
37.4%
31.14%
0.2%
Electronic Components
Electronic Components, Nec
United States of America
ORLANDO
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