The LGL Group, Inc. (NYSE MKT: LGL) (the “Company”), announced
results for the three and six months ended June 30, 2014.
Summary of Q2 2014 Results:
- Revenues of $5.9 million, a decrease of
16.0% compared to Q2 2013
- Net loss of ($1.3) million, or ($0.49)
per share
- Adjusted EBITDA loss of ($0.5) million,
or ($0.21) per share
- Gross margin of 23.3%
- Backlog improves to $9.6 million at
6/30/2014 vs. $9.1 million at 3/31/2014
Total revenues for Q2 2014 were approximately $5.9 million, a
decrease of 16.0% compared to revenues of $7.0 million for the
comparable period in 2013. The Company reported a net loss of
($1.3) million, or ($0.49) per share for Q2 2014, which included a
one-time non-cash restructuring charge of ($0.4) million, compared
with a net loss of ($5.0) million, or ($1.91) per share for the
comparable period in 2013, which included a one-time non-cash
charge of ($4.1) million to recognize a valuation allowance against
our deferred tax assets as required by U.S. GAAP. Adjusted EBITDA,
which excludes non-cash stock-based compensation and one-time
non-cash restructuring charges, was a loss of ($0.5) million, or
($0.21) per share, for Q2 2014, compared to a loss of ($0.4)
million, or ($0.16) per share, for the comparable period in
2013.
Total revenues for the six months ended June 30, 2014, were
approximately $12.0 million, a decrease of 16.6% compared to
revenues of $14.4 million for the comparable period in 2013. The
Company reported a net loss of ($2.1) million, or ($0.80) per share
for the six months ended June 30, 2014, which included a one-time
non-cash restructuring charge of ($0.4) million, compared with a
net loss of ($5.0) million, or ($1.94) per share for the comparable
period in 2013, which included a one-time non-cash charge of ($4.1)
million to recognize a valuation allowance against our deferred tax
assets. Adjusted EBITDA, which excludes non-cash stock-based
compensation and one-time non-cash restructuring charges, was a
loss of ($1.4) million, or ($0.54) per share, for the six months
ended June 30, 2014, compared to a loss of ($0.4) million, or
($0.14) per share, for the comparable period in 2013.
Gross margin for Q2 2014 was 23.3%, which was a decrease of 2.4
percentage points from 25.7% for the comparable period in 2013. The
decrease was due to the 16.0% decrease in revenues for Q2 2014 as
compared to the comparable period in 2013, and an increase in
accrued warranty expense of $344,000 during Q2 2014, which was
related to two isolated product defects. Excluding the increase in
accrued warranty expense, gross margin for Q2 2014 would have been
29.2%. Gross margin for the six months ended June 30, 2014 was
24.7%, which was a decrease compared to 29.2% for the comparable
period in 2013.
Michael Ferrantino, Sr., LGL’s Executive Chairman and CEO, said
“2014 is a transition year for our Company, and our Q2 2014 results
reflect the work that remains to be done. During the quarter, we
embarked on a continuation of our restructuring efforts to improve
our cost structure, which we expect will ultimately lead to
improved results. These changes are expected to be substantially
completed by the end of Q3 2014. Management continues to evaluate
opportunities to improve our operating leverage, and we’re fully
committed to restoring sustainable profitability and becoming more
competitive within the dynamic markets we serve as a niche designer
and manufacturer of highly-engineered electronic components and
subsystems.”
Backlog Improved to $9.6M; Solid Capital Position
At June 30, 2014, the Company’s order backlog was $9.6 million,
an increase of 4.8% compared to $9.1 million at March 31, 2014, and
an increase of 5.4% compared to $9.1 million as of June 30, 2013.
The backlog increase is due to an increase in repeat orders for
existing products and new orders resulting from our recent
acquisition of certain filter product line assets from Trilithic on
January 31, 2014.
Cash and cash equivalents as of June 30, 2014, was $6.1 million,
or $2.36 per share, and cash-adjusted working capital (accounts
receivable, plus inventory, less accounts payable) remained at $5.9
million, or $2.26 per share, at June 30, 2014, as compared to March
31, 2014.
Mr. Ferrantino said, “Our strategy remains to transform our
business by leveraging our core strength as an engineering and
technical leader within our markets, and by revitalizing our
intellectual property through both organic development and
strategic investments that will strengthen MtronPTI’s RF/microwave
portfolio.”
The Company also announced that due to the focus on its ongoing
restructuring, it will not hold an earnings conference call to
review financial results for the next several quarters. However,
the Company will continue to provide vital and timely financial
information through its website, www.lglgroup.com, and through its
press releases and periodic SEC filings. Investors are also invited
to join the Company’s mailing list to receive press releases
directly by e-mail:
http://www.lglgroup.com/content/contact-lgl-group.
About The LGL Group, Inc.
The LGL Group, Inc., through its wholly-owned subsidiary
MtronPTI, manufactures and markets highly-engineered electronic
components used to control the frequency or timing of signals in
electronic circuits. These devices are used extensively in
electronic systems for military applications, avionics,
earth-orbiting satellites, medical devices, instrumentation,
industrial devices and global positioning systems. They are also
used in infrastructure equipment for the telecommunications and
network equipment industries. The Company has operations in
Orlando, Florida, Yankton, South Dakota, Yantai, China and Noida,
India, and sales offices in Sacramento, California, Hong Kong and
Shanghai, China.
For more information on the Company and its products and
services, contact R. LaDuane Clifton, Chief Financial Officer, The
LGL Group, Inc., 2525 Shader Rd., Orlando, Florida 32804, (407)
298-2000, or visit the Company’s Web site: www.lglgroup.com.
Caution Concerning Forward Looking Statements
Information included or incorporated by reference in this Press
Release may contain forward-looking statements. This information
may involve known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or
achievements to be materially different than the future results,
performance or achievements expressed or implied by any
forward-looking statements. Forward-looking statements, which
involve assumptions and describe our future plans, strategies and
expectations, are generally identifiable by use of the words “may,”
“should,” “expect,” “anticipate,” “estimate,” “believe,” “intend”
or “project” or the negative of these words or other variations on
these words or comparable terminology.
Examples of forward-looking statements include, but are not
limited to, statements regarding efforts to grow revenue,
expectations regarding fulfillment of backlog, future benefits to
operating margins and the adequacy of cash resources. Actual events
or results may differ materially from those discussed in
forward-looking statements as a result of various factors,
including, without limitation, the risks outlined under “Risk
Factors” in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 31, 2014, as updated by
our subsequently filed quarterly reports on Form 10-Q. In light of
these risks and uncertainties, there can be no assurance that the
forward-looking statements contained in this Press Release will in
fact be accurate. Further, we do not undertake any obligation to
publicly update any forward-looking statements. As a result, you
should not place undue reliance on these forward-looking
statements.
THE LGL GROUP, INC.
Condensed Consolidated Statements of
Operations - UNAUDITED
(Dollars in Thousands, Except Shares and
Per Share Amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2014 2013 2014 2013
REVENUES
$ 5,850 $ 6,965 $ 11,981 $ 14,363 Cost
and Expenses: Manufacturing cost of sales 4,485 5,177 9,020 10,173
Engineering, selling and administrative 2,246 2,606 4,656 5,286
Restructuring expense 397 — 397
— OPERATING LOSS (1,278 ) (818 ) (2,092 )
(1,096 ) Other Income (Expense): Interest expense, net (8 ) (10 )
(16 ) (29 ) Other income (expense), net 17 (1
) 30 — Total Other Income (Expense)
9 (11 ) 14 (29 ) LOSS
BEFORE INCOME TAXES (1,269 ) (829 ) (2,078 ) (1,125 ) Income tax
provision — (4,135 ) —
(3,922 )
NET LOSS
$ (1,269 ) $ (4,964 ) $ (2,078 ) $ (5,047 )
Weighted average number of shares used in
basic and diluted net loss per common share calculation.
2,594,743 2,602,329 2,594,764
2,600,248
BASIC AND DILUTED NET LOSS PER COMMON
SHARE
$ (0.49 ) $ (1.91 ) $ (0.80 ) $ (1.94 )
THE LGL GROUP, INC.
Condensed Consolidated Balance Sheets –
UNAUDITED
(Dollars in Thousands)
June 30,2014
December 31,2013
ASSETS Cash and cash equivalents $ 6,125 $ 7,183 Restricted cash
1,500 1,500 Accounts receivable, less allowances of $45 and $42,
respectively 3,442 3,237 Inventories, net 4,551 4,629 Prepaid
expenses and other current assets 307 405 Total
current assets 15,925 16,954 Property, plant and
equipment, net 3,737 3,986 Other assets, net 814 323
Total assets 20,476 21,263 LIABILITIES AND
STOCKHOLDERS’ EQUITY Note payable to bank 1,500 1,181 Accounts
payable 2,117 1,978 Accrued restructuring expense 350 70 Other
current liabilities 1,643 1,279 Total Liabilities
5,610 4,508 Stockholders’ Equity 14,866
16,755 Total Liabilities and Stockholders’ Equity $ 20,476 $ 21,263
Reconciliations of GAAP to Non-GAAP Measures
To supplement our condensed consolidated financial statements
which are presented in accordance with generally accepted
accounting principles in the United States (“GAAP”), the Company
uses non-GAAP additional measures of operating results, net
earnings and earnings per share adjusted to exclude certain costs,
expenses, gains and losses we believe appropriate to enhance an
overall understanding of our past financial performance and also
our prospects for the future. These adjustments to our GAAP results
are made with the intent of providing both management and investors
a more complete understanding of the underlying operational results
and trends and our marketplace performance. For example, the
non-GAAP results are an indication of our baseline performance
before gains, losses or other charges that are considered by
management to be outside of our core business segment operational
results. The presentation of this additional information is not
meant to be considered in isolation or as a substitute for net
earnings or diluted earnings per share prepared in accordance with
GAAP.
Reconciliation of GAAP Loss Before Income
Taxes to Non-GAAP Adjusted EBITDA Income (Loss)
For the period ended June 30, 2014 (000’s, except
shares and per share amounts) Three months Six
months Net loss before income taxes $ (1,269 ) $ (2,078
) Add: Interest expense 8 16 Add: Depreciation and amortization 238
473 Add: Non-cash stock compensation 96 186 Add: One-time
restructuring expense 397 -- Adjusted
EBITDA loss $ (530 ) $ (1,403 ) Weighted average number of
shares used in basic and diluted EPS calculation 2,594,743
2,594,764
Adjusted EBITDA loss per share
$ (0.21 ) $ (0.54 )
For the period ended
June 30, 2013 (000’s, except shares and per share amounts)
Three months Six months Net loss before income
taxes $ (829 ) $ (1,125 ) Add: Interest expense 10 29 Add:
Depreciation and amortization 248 488 Add: Non-cash stock
compensation 143 253 Adjusted EBITDA
income $ (428 ) $ (355 ) Weighted average number of shares
used in basic and diluted EPS calculation 2,602,329 2,600,248
Adjusted EBITDA loss per share
$ (0.16 ) $ (0.14 )
The LGL Group, Inc.R. LaDuane Clifton,
407-298-2000lclifton@lglgroup.com
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