LGL Group Inc (LGL, Financial) filed Quarterly Report for the period ended 2009-03-31.
The LGL Group Inc. is a holding corporation for two manufacturing subsidiaries. M-tron Industries Inc. designs and manufactures customized electronic components used primarily to control the frequency or timing of electronic signals in communications systems.Lynch Systems Inc. designs and produces advanced manufacturing systems for the electronic display and consumer glass industries. LGL Group Inc has a market cap of $7.3 million; its shares were traded at around $3.33 with and P/S ratio of 0.2.
The Companys cash and cash equivalents and the investment in marketable security at March 31, 2009 was $5,497,000 as compared to $5,339,000 at December 31, 2008. MtronPTI had unused borrowing capacity of $4,117,000 under MtronPTIs revolving line of credit at March 31, 2009, as compared to $2,751,000 at December 31, 2008. At March 31, 2009, MtronPTI had $1,383,000 outstanding under its revolving loan, compared with $2,749,000 at December 31, 2008.
At March 31, 2009, the Companys net working capital was $8,858,000 as compared to $9,683,000 at December 31, 2008. At March 31, 2009, the Company had current assets of $15,227,000 and current liabilities of $6,369,000. The ratio of current assets to current liabilities was 2.39 to 1.00 at March 31, 2009, compared to 2.26 to 1.00 at December 31, 2008. The decrease in net working capital is primarily due to the decrease in the Companys accounts receivable balance and a decrease in the outstanding balance under the revolving credit facility.
Cash provided by operating activities was $1,721,000 for the three months ended March 31, 2009, compared to cash used in operating activities from operations of $177,000 for the three months ended March 31, 2008. The increase in cash provided by operating activities is due to the net decrease in the accounts receivable balance representing a net change in the outstanding accounts receivable balance for the three months ended March 31, 2009 from the collection of accounts receivable of $2,350,000, compared to a net collection of accounts receivable of $237,000 during the comparable period in 2008.
At March 31, 2009, total liabilities of $9,961,000 was $1,359,000 less than the total liabilities at December 31, 2008 of $11,320,000. The debt decreased due to the decrease in MtronPTIs borrowing on its revolving loan, which was in addition to a decrease in term loans outstanding due to scheduled repayments. At March 31, 2009, the Company had $382,000 in current maturities of long-term debt compared with $397,000 at December 31, 2008. The decrease in consolidated current maturities of long-term debt was in addition to an increase in cash and cash equivalents of $156,000.
At March 31, 2009, the Companys subsidiary MtronPTI was not in compliance with the fixed charge coverage ratio covenant (0.52 to 1.0 fixed charge coverage ratio vs. the minimum requirement of 1.2 to 1.0). RBC has agreed to waive non-compliance with that covenant for the quarter ended March 31, 2009, contingent upon (i) the repayment by the Company on behalf of MtronPTI of $400,000 of the amount outstanding under the RBC Term Loan on or before May 31, 2009, (ii) a freeze on all payments from MtronPTI to the Company (including, but not limited to, interest payments and management fees) until MtronPTI is in full compliance with that covenant and (iii) RBCs receipt of an updated appraisal of certain of MtronPTIs property securing obligations under the RBC Loan Agreement, which appraisal may necessitate an additional repayment under the RBC Term Loan in order to maintain a loan-to-value ratio acceptable to RBC. RBC also agreed to amend the RBC Loan Agreement to (i) allow the $1,000,000 cash infusion to MtronPTI for the partial repayment under the FNBO Revolving Loan to be included in the numerator of the fixed charge coverage ratio for calculations on each quarterly testing date through March 31, 2010, (ii) increase the amount required under the tangible net worth covenant from $4.2 million to $7.0 million (in line with the tangible net worth covenant under the FNBO Loan Agreement) and (iii) provide that if MtronPTI is not in compliance with the covenants at any quarterly testing date through March 31, 2010, MtronPTI will have 45 days from the end of such quarter to cure the default. The Company expects to finalize the amendments with RBC shortly. The Company expects that, with these amendments and based on its current covenant compliance projections, MtronPTI will be in compliance with the RBC Loan Agreement covenants at each quarterly testing date through March 31, 2010.
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The LGL Group Inc. is a holding corporation for two manufacturing subsidiaries. M-tron Industries Inc. designs and manufactures customized electronic components used primarily to control the frequency or timing of electronic signals in communications systems.Lynch Systems Inc. designs and produces advanced manufacturing systems for the electronic display and consumer glass industries. LGL Group Inc has a market cap of $7.3 million; its shares were traded at around $3.33 with and P/S ratio of 0.2.
Highlight of Business Operations:
Consolidated revenues decreased by $2,241,000, or 22.9%, to $7,542,000 for the first quarter 2009 from $9,783,000 for the comparable period in 2008. The decrease is due primarily to a general economic slowdown and a corresponding decrease in demand for the electronic components in which our products are used. This has resulted in a decrease in foreign sales of $1,683,000 and a decrease in domestic sales of $558,000 over the comparable period in 2008. Under the leadership of its new Chief Operating Officer, the Company has recently increased its efforts to grow revenue in additional segments of the timing and frequency equipment market, such as alternative energy management, high-end server/SANs, energy exploration, military personnel protection and homeland security. The Company is expecting to partially weather the recessionary impact on its current customers and revenue base with additional revenues from growth in other industries.The Companys cash and cash equivalents and the investment in marketable security at March 31, 2009 was $5,497,000 as compared to $5,339,000 at December 31, 2008. MtronPTI had unused borrowing capacity of $4,117,000 under MtronPTIs revolving line of credit at March 31, 2009, as compared to $2,751,000 at December 31, 2008. At March 31, 2009, MtronPTI had $1,383,000 outstanding under its revolving loan, compared with $2,749,000 at December 31, 2008.
At March 31, 2009, the Companys net working capital was $8,858,000 as compared to $9,683,000 at December 31, 2008. At March 31, 2009, the Company had current assets of $15,227,000 and current liabilities of $6,369,000. The ratio of current assets to current liabilities was 2.39 to 1.00 at March 31, 2009, compared to 2.26 to 1.00 at December 31, 2008. The decrease in net working capital is primarily due to the decrease in the Companys accounts receivable balance and a decrease in the outstanding balance under the revolving credit facility.
Cash provided by operating activities was $1,721,000 for the three months ended March 31, 2009, compared to cash used in operating activities from operations of $177,000 for the three months ended March 31, 2008. The increase in cash provided by operating activities is due to the net decrease in the accounts receivable balance representing a net change in the outstanding accounts receivable balance for the three months ended March 31, 2009 from the collection of accounts receivable of $2,350,000, compared to a net collection of accounts receivable of $237,000 during the comparable period in 2008.
At March 31, 2009, total liabilities of $9,961,000 was $1,359,000 less than the total liabilities at December 31, 2008 of $11,320,000. The debt decreased due to the decrease in MtronPTIs borrowing on its revolving loan, which was in addition to a decrease in term loans outstanding due to scheduled repayments. At March 31, 2009, the Company had $382,000 in current maturities of long-term debt compared with $397,000 at December 31, 2008. The decrease in consolidated current maturities of long-term debt was in addition to an increase in cash and cash equivalents of $156,000.
At March 31, 2009, the Companys subsidiary MtronPTI was not in compliance with the fixed charge coverage ratio covenant (0.52 to 1.0 fixed charge coverage ratio vs. the minimum requirement of 1.2 to 1.0). RBC has agreed to waive non-compliance with that covenant for the quarter ended March 31, 2009, contingent upon (i) the repayment by the Company on behalf of MtronPTI of $400,000 of the amount outstanding under the RBC Term Loan on or before May 31, 2009, (ii) a freeze on all payments from MtronPTI to the Company (including, but not limited to, interest payments and management fees) until MtronPTI is in full compliance with that covenant and (iii) RBCs receipt of an updated appraisal of certain of MtronPTIs property securing obligations under the RBC Loan Agreement, which appraisal may necessitate an additional repayment under the RBC Term Loan in order to maintain a loan-to-value ratio acceptable to RBC. RBC also agreed to amend the RBC Loan Agreement to (i) allow the $1,000,000 cash infusion to MtronPTI for the partial repayment under the FNBO Revolving Loan to be included in the numerator of the fixed charge coverage ratio for calculations on each quarterly testing date through March 31, 2010, (ii) increase the amount required under the tangible net worth covenant from $4.2 million to $7.0 million (in line with the tangible net worth covenant under the FNBO Loan Agreement) and (iii) provide that if MtronPTI is not in compliance with the covenants at any quarterly testing date through March 31, 2010, MtronPTI will have 45 days from the end of such quarter to cure the default. The Company expects to finalize the amendments with RBC shortly. The Company expects that, with these amendments and based on its current covenant compliance projections, MtronPTI will be in compliance with the RBC Loan Agreement covenants at each quarterly testing date through March 31, 2010.
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