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LGL GROUP INC (LGL)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025: Total revenues were $0.918M, up modestly year over year from $0.888M, but down sequentially vs Q4’s $1.157M; gross margin was 52.4% (vs 48.0% YoY; 60.0% in Q4); net (loss) income to common was -$6K, driven by lower net investment income and higher manufacturing and SG&A costs despite higher net sales .
  • Electronic Instruments revenue rose 27% YoY; management highlighted strengthening tactical edge AI contract development at P3 Logistic Solutions and noted cash and marketable securities of roughly $42M at quarter-end .
  • Corporate actions: Form S-1 expected to be filed in Q2 with an amended warrant agreement (over-subscription privilege); MGHL acquisition expected to close in Q2; two directors will not stand for re-election to focus on the Connectivity Partnership .
  • Wall Street consensus for Q1 2025 EPS and revenue was unavailable via S&P Global, so beat/miss vs estimates cannot be determined (Values retrieved from S&P Global).*

What Went Well and What Went Wrong

What Went Well

  • Electronic Instruments revenue increased 27% YoY to $498K; segment pre-tax income improved to $19K, reflecting higher shipments and mix .
  • Gross margin improved YoY to 52.4% from 48.0%, supported by higher-margin product mix in the quarter .
  • Strategic initiatives: P3 Logistic Solutions’ tactical edge AI contract development strengthens; DARPA Venture Horizons partnership (disclosed in prior quarter) broadens merchant investment opportunity set .
    • “We are also pleased to announce we were selected as a partner in the DARPA Venture Horizons program…” — Marc Gabelli, Chairman & Co-CEO .

What Went Wrong

  • Net investment income fell YoY ($417K vs $499K), and higher manufacturing and SG&A costs pressured profitability, resulting in a small loss to common (-$6K) .
  • Sequential margin compression vs Q4 (52.4% in Q1 vs 60.0% in Q4) on product mix; total revenues also declined sequentially ($0.918M vs $1.157M) .
  • Backlog decreased to $295K at March 31 from $336K at year-end, implying lighter near-term shipments vs the strong Q4 end-state .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total Revenues ($USD Thousands)1,179 1,157 918
Net (Loss) Income to LGL Common ($USD Thousands)72 202 (6)
Diluted EPS ($USD)$0.01 $0.04 $0.00
Gross Margin (%)43.4% 60.0% 52.4%
Net Sales ($USD Thousands)650 653 498
Net Investment Income ($USD Thousands)531 503 417
Manufacturing Cost of Sales ($USD Thousands)368 261 237
Income from Ops Before Income Taxes ($USD Thousands)138 245 41
Segment Revenues ($USD Thousands)Q3 2024Q4 2024Q1 2025
Electronic Instruments650 653 498
Merchant Investment318 306 247
Corporate211 198 173
Total1,179 1,157 918
KPIsQ3 2024Q4 2024Q1 2025
Backlog ($USD Thousands)505 336 295
Cash & Cash Equivalents ($USD Thousands)41,602 41,585 41,925
Marketable Securities ($USD Thousands)16 17 20
Working Capital ($USD Thousands)41,535 41,738 41,807
Q1 2025 vs Wall Street ConsensusQ1 2025 ActualQ1 2025 Consensus
Revenue$918K NA*
EPS (Diluted)$0.00 NA*

*Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Financial guidance (Revenue, EPS, Margins)Q2/Q3 2025None disclosedNone disclosedMaintained (no formal guidance)
Form S-1 (amended warrant agreement; over-subscription privilege)Q2 2025Not previously specifiedExpected filing in Q2 2025New corporate action
Warrants exercisability and instructionsThrough Nov 16, 2025Exercisable once VWAP threshold metExercisable; updated instructions to be released; 5 warrants = 1 share at $4.75 strikeClarification/update
MGHL acquisition close timingQ2 2025In processExpected to close in Q2 2025Maintained timeline

Earnings Call Themes & Trends

Note: No Q1 2025 earnings call transcript was available; themes reflect press releases and 8-K disclosures.

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
AI/technology initiativesP3 selected for DARPA Venture Horizons; focus on defense-tech scaling P3 tactical edge AI contract development strengthens Positive momentum in AI initiatives
Macro/treasury yieldsResilience despite Fed rate cut; modest yield decline noted Lower yields reduced net investment income YoY Macro yield pressure on investment income
Product performanceHigher shipments; Electronic Instruments growth and margin expansion in Q4 Electronic Instruments +27% YoY; mix supported margins Sustained EI strength, but lower sequential sales
Backlog/near-term demandBacklog rose to $505K in Q3; fell to $336K at year-end Backlog declined to $295K; most ships within 90 days Near-term order book softer vs Q4
Corporate actionsWarrants threshold met (Mar 4, 2025); DARPA partnership; active merchant investment strategy S-1 with amended warrants (over-sub privilege); MGHL closing expected in Q2 Corporate catalysts upcoming
Board/leadershipNew talent additions noted (Cameron Pforr) Two directors not standing for re-election to focus on Connectivity Partnership Board reshaping aligned to strategy

Management Commentary

  • “The growth in our Electronic Instruments business reflects our commitment to driving innovation and delivering high-performance instruments to our customers… we were selected as a partner in the DARPA Venture Horizons program…” — Marc Gabelli, Chairman & Co-CEO (Q4 release) .
  • “Although our yields in U.S. Treasuries have seen a modest decline, the portfolio's overall performance has been resilient despite the Federal Reserve's September rate cut…” — Tim Foufas, Co-CEO (Q3 release) .
  • “We remain committed to enhancing stockholder value and are excited to continue supporting LGL Group through the Company's strategic investment in the Connectivity Partnership.” — Michael J. Ferrantino, Jr. and Timothy Foufas (Board announcement) .

Q&A Highlights

  • No Q1 2025 earnings call transcript was available; therefore, Q&A themes and clarifications cannot be assessed for the quarter [ListDocuments result; none found].

Estimates Context

  • Wall Street consensus estimates for Q1 2025 EPS and revenue were unavailable via S&P Global; as a result, no beat/miss determination vs consensus can be made (Values retrieved from S&P Global).*
  • Given the absence of consensus, sell-side models may need to reflect: lower net investment income vs prior year, higher SG&A run-rate, and sequential margin compression vs Q4, while acknowledging Electronic Instruments’ YoY growth .

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Electronic Instruments strength (+27% YoY) and YoY margin improvement are supportive, but sequential softness vs Q4 and lower net investment income trimmed profitability; watch mix and shipment cadence into Q2 .
  • Near-term revenue visibility is modestly softer as backlog declined to $295K, though most backlog is expected to ship within 90 days; monitor order conversion and new bookings .
  • Corporate catalysts: anticipated S-1 filing with amended warrant agreement (over-subscription privilege), MGHL close expected in Q2; both could drive trading interest and strategic optionality .
  • Warrants are exercisable (5-for-1 at $4.75 strike) through Nov 16, 2025, with updated instructions forthcoming; consider potential dilution and capital structure impacts in the trading setup .
  • Investment income is sensitive to Treasury yield dynamics; further yield declines could pressure non-operating income, increasing reliance on Electronic Instruments’ execution to sustain margins .
  • Operating cost pressure (manufacturing and SG&A) remains a swing factor; any cost actions or mix shift to higher-margin products would be key to restoring sequential margin levels .
  • AI/defense-tech adjacency via P3 and prior DARPA engagement offers medium-term optionality; look for contract milestones that translate to revenue and margin leverage .