The LGL (US:LGL)2021-03-24 18:35Financial Data and Key Metrics Changes - The company's annual revenue for 2020 was $31.2 million, a decline of $0.7 million or 2.2% compared to $31.9 million in 2019 [30] - Gross margins decreased from 39.2% in 2019 to 31% in 2020, returning to historic gross margins in the strong mid-30s [30] - Adjusted EBITDA for 2020 was reported at 8.6% [30] - The backlog decreased from $21.9 million in 2019 to $19.8 million in 2020, remaining strong and steady going into 2021 [30] Business Line Data and Key Metrics Changes - The avionics market experienced a decline due to COVID-19, but increased revenues were seen in the space, defense, and medical markets [30] - MTronPTI, the principal operating subsidiary, focused on becoming a preferred supplier in the defense landscape, particularly in avionics, military, aerospace, and space markets [24] Market Data and Key Metrics Changes - The company faced significant shifts in customer mix, particularly with a decline in the aerospace industry due to COVID-19 [7] - Despite the challenges, MTronPTI managed to keep revenues close to 2019 levels, indicating resilience in its operations [23] Company Strategy and Development Direction - The company intends to continue participating in SPAC sponsorships across multiple industry verticals, viewing it as a way to deploy capital and earn returns [7] - Future growth opportunities are expected to come from developing new technologies and products, as well as pursuing synergistic acquisitions [28] - The company aims to broaden its franchise by expanding into new markets and enhancing its product offerings [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by COVID-19 but expressed confidence in the company's ability to adapt and grow [7] - The focus will be on cash generation, efficiencies, and excellence, with an emphasis on M&A opportunities [11] - The management team is optimistic about the future, highlighting the potential for growth through product development and market share gains [32] Other Important Information - The company has $24 million in cash and marketable securities as of December 31, 2020 [6] - A merger with IronNet Cybersecurity through LGL Systems Acquisition Corp was announced, which is expected to provide economic value to the company [36] Q&A Session Summary Question: Can you provide parameters around the SPAC franchise business and the significance of the IronNet deal? - The IronNet transaction has met its financing conditions to close, with an estimated economic value of about $12 million for The LGL Group, not including potential share price appreciation [36] Question: Clarification on the investment in SPAC and warrants? - The company invested in the SPAC sponsor, which includes both B shares and warrants, thus taking on all risk capital [40] Question: How does the current investment value look? - The economic interest is approximately $24 million in cash plus about $15 million at $10 per share, totaling around $40 million [43]