LGL GROUP INC - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - August 14, 2014

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8-K - LGL Q2 2014 EARNINGS RELEASE - LGL GROUP INClgl8k_20140814.htm
Exhibit 99.1

 
 
The LGL Group, Inc. Reports Second Quarter 2014 Financial Results

ORLANDO, FL, August 14, 2014 – 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.
###

Contact

R. LaDuane Clifton
The LGL Group, Inc.
lclifton@lglgroup.com
(407) 298-2000



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
)


LGL GROUP INC Reports