THE LGL GROUP, INC.

Recommendation history

• Q3 2013HoldHold: Q3 revenue fell to $6.1 million, gross margin dropped to 22.4%, backlog declined 7% sequentially to $8.4 million, and the company posted a $0.46 pre-tax loss. The $9.4 million cash balance and roughly $7.20 book value per share provide downside support versus the approximately $5.80 stock price, but restructuring is defensive and growth programs remain unproven.
• Q1 2012HoldHOLD: LGL’s Q1 was materially weak, with revenue down 20% year over year to $7.2 million, gross margin collapsing to 22.3%, and a $0.23 per-share loss. The $8.9 million backlog, $13.4 million cash balance, and engineering activity tied to 4G LTE provide recovery potential, but management offered no timing or quantified path to restore margins while telecom demand and repeat orders remain sluggish.
• Q1 2014HoldHold: LGL showed sequential improvement, but the quarter remains financially weak—revenue was $6.1 million, gross margin 26%, and net loss $0.31 per share. The bull case is a positive book-to-bill, backlog up nearly 6% sequentially to $9.1 million, and expected margin benefits from Trilithic; the tension is a 7.8% year-over-year revenue decline, ongoing networking price compression, and management providing no quantified recovery outlook.
• FY 2011HoldHold: LGL finished 2011 with revenue just under $36 million, down more than 23% year over year, while Q4 revenue fell nearly one-third to $7.4 million and backlog declined to $8.6 million. Cost controls preserved a 30% full-year gross margin, 4.2% EBITDA margin, and $2.3 million of operating cash flow, but management could not confirm a market bottom or provide guidance; the recovery case remains dependent on repeat orders returning in the second half of 2012.
• Q2 2011HoldHold: LGL produced Q2 revenue of $9.6 million, up 4%–5% sequentially but notably below Q2 2010, with 31.8% gross margin, approximately 8% EBITDA margin ($773,000), and $0.13 diluted EPS. The $12 million-plus backlog was flat and cash was solid at $11 million, but military repeat-order visibility is weak and management characterized OEM and contract-manufacturer demand as mixed rather than clearly recovering.
• 2018-12-01HoldHold. LGL showed improving execution but not a recovery: FY2012 revenue fell 16.7% to just under $30 million, backlog remained flat at $8.7 million, and the company posted a $0.51 per-share loss with negative $3.2 million EBITDA. Q4 was better—$7.6 million revenue, 30.7% gross margin, slight positive EBITDA, and a reduced $0.08 per-share loss—but management remained cautious, and the growth case rests on unproven software-defined-radio, LTE, India, and avionics opportunities.
• Q2 2013SellSell: Q2 revenue fell 8% year over year to $7.0 million, the company posted a $0.32 million pretax loss and a $1.91 million net loss including a $1.59 million deferred-tax valuation allowance. Backlog improved 9% sequentially to just over $9 million and aerospace/defense is a bright spot, but networking demand, pricing pressure, margin deterioration and cash burn remain unresolved; the strategic review is too uncertain to support a buy.