GREENWICH, Conn., Aug. 15, 2007 (PRIME NEWSWIRE) -- The LGL Group, Inc. (AMEX:LGL) today announced that its loss from continuing operations for the second quarter of 2007 was $61,000 or $0.03 per share compared with a profit of $798,000 or $0.37 per share for the same quarter in 2006. Net loss for the June quarter of 2007 was $1,846,000 or $0.86 per fully diluted share (compared to net income of $499,000 or $0.23 per fully diluted share, for the June quarter 2006.) The June 30, 2007 results include losses from the discontinued operations of its subsidiary, Lynch Systems, of $803,000 and a loss on the sale of certain of Lynch Systems' assets of $982,000, totaling $1,785,000 or $0.83 per fully diluted share. Lynch Systems had incurred losses of $299,000 or $.14 per fully diluted share in the June quarter of 2006.
On June 19, 2007, in accordance with a purchase agreement dated May 17, 2007, between Lynch Systems Inc. and Olivotto Glass Technologies S.p.A., Lynch Systems completed a sale of certain of its assets to Lynch Technologies, LLC.
Lynch Systems incurred operating losses of $1.9 million on sales of $7.75 million for the full year of 2006 and reported further operating losses of $197,000 on sales of $1.3 million in the quarter ended March 31, 2007, and operating losses of $927,000 on sales of $1.2 million in the current quarter ended June 30, 2007. The asset sale effectively removes the Company from the business of heavy equipment manufacturing for the glassware industry.
MtronPTI, LGL's remaining subsidiary, designs and manufactures customized precision electronic components such as filters and frequency control devices, crystals and oscillators. It has offices or factories in Yankton, South Dakota, Orlando, Florida, and Noida, India and in Hong Kong.
For the second quarter 2007, MtronPTI's revenues and the consolidated revenues from continuing operations were $10.0 million compared to $10.6 million for the second quarter 2006. Revenues decreased by $560,000 due to a decline in oscillator sales caused primarily by price reductions and credit issues at key distributors.
Consolidated gross margin as a percentage of revenues for the second quarter decreased to 25% from 33% for the comparable period in 2006. The reduction in gross margin reflects price reductions and the continuing yield losses and rework costs at MtronPTI's Orlando facility. The June quarter 2007 margins did however improve by 3% from 22% reported for the first quarter of 2007. The company continues its effort to improve production yields and reduce rework costs at the Orlando facility.
Operating loss of $137,000 for the second quarter 2007 is a reduction of $1,008,000 from $871,000 operating profit for the comparable period in 2006. MtronPTI's operating profit declined from $1,127,000 in 2006 to $284,000 in the 2007 June quarter. The $843,000 decline was caused by a $950,000 (7.6%) reduction in gross margin caused primarily by higher costs related to yield losses in Orlando. Corporate expenses increased $167,000 to $485,000 for the second quarter 2007 from $318,000 for the comparable period in 2006. This increase is due to higher legal fees due to new proxy requirements, SEC filings and the Company's reincorporation to Delaware as well as higher director fees and professional fees associated with strategic planning.
Earnings before interest, taxes, depreciation, and amortization ("EBITDA"), a non-GAAP performance measure, is $128,000 in the second quarter of 2007 compared to $1,083,000 for the June quarter in 2006. EBITDA at MtronPTI was $548,000 for the 2007 period a decrease of $724,000 from the second quarter result of $1,272,000 in 2006. Corporate expenses included in the EBITDA calculation increased $179,000 compared with the second quarter of 2006 because of higher legal and professional fees. A non-GAAP EBITDA to net income reconciliation is provided below.
Total backlog of manufactured products at June 30, 2007 was $9.1 million. MtronPTI had backlog orders of $8.4 million at March 31, 2007, of $8.1 million at December 31, 2006 and $9.6 million at June 30, 2006.
At June 30, 2007, the Company's total assets and total debt were $24.9 million and $6.7 million, respectively, compared to $31.0 million and $6.5 million at December 31, 2006. Net working capital was $11.5 million, comprised of current assets of $19.8 million and current liabilities of $8.3 million. The ratio of current assets to current liabilities was 2.39 to 1 at June 30, 2007, compared to 2.12 to 1 at December 31, 2006.
As a result of the asset sale we have reclassified the results of operations of Lynch Systems for all periods presented to discontinued operations within the statement of operations in accordance with accounting principles generally accepted in the United States.
For more information on the company and its products and services, contact Jeremiah Healy, President and CEO, or Steve Pegg, CFO, LGL Group, Inc., 140 Greenwich Avenue, 4th Floor, Greenwich, Connecticut 06830, (203) 622-1150, or visit the company's Web site: www.LGLGroup.com.
Caution Concerning Forward Looking Statements
This document includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations due to changes in global political, economic, business, competitive, market and regulatory factors. More detailed information about those factors is contained in Lynch Corporation's filings with the Securities and Exchange Commission.
THE LGL GROUP, INC
STATEMENTS OF OPERATIONS
(Dollars In Thousands, Except Per Share Data)
three months ended six months ended
June 30, June 30,
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues - MtronPTI $10,014 $10,574 $19,391 $20,322
OPERATING EXPENSES
MtronPTI 9,729 9,385 19,223 18,220
Corporate expenses -
unallocated 485 318 934 647
--------- --------- --------- ---------
Consolidated Total 10,151 9,703 20,157 18,867
OPERATING PROFIT (LOSS)
MtronPTI 284 1,127 (82) 1,977
corporate (360) (193) (683) (397)
--------- --------- --------- ---------
(137) 871 (765) 1,580
OTHER INCOME(EXPENSE)
Investment income 0 286 1,526 520
Interest expense, net (91) (160) (181) (306)
gain on sale of land 88 88
Other income (expense) (29) 49 (8)
--------- --------- --------- ---------
Consolidated Total (32) 126 1,394 206
INCOME BEFORE INCOME TAXES (169) 997 629 1,786
PROVISION FOR INCOME TAXES 108 (199) (41) (387)
INCOME/(LOSS) BEFORE
DISCONTINUED OPS (61) 798 588 1,399
(LOSS) FROM DISCON OPS (803) (299) (978) (510)
LOSS ON SALE OF LYNCH
SYSTEMS (982) -- (982) --
NET INCOME/(LOSS) ($1,846) $499 ($1,372) $889
WEIGHTED AVERAGE SHARES
OUTSTANDING 2,154,702 2,154,702 2,154,702 2,154,702
BASIC & DILUTED INCOME
(LOSS) PER SHARE: ($0.86) $ 0.23 ($0.64) $ 0.41
(LOSS)EARNINGS PER SHARE
FROM CONTINUING
OPERATIONS: ($0.03) $0.37 $0.27 $0.65
(LOSS)EARNINGS PER SHARE
FROM DISCONTINUED
OPERATIONS: ($0.83) ($0.14) ( $0.83) ($0.24)
EARNINGS (LOSS) BEFORE
INTEREST, TAXES,
DEPRECIATION &
AMORTIZATION (EBITDA)
MtronPTI 486 1,272 595 2,627
Corporate (358) (189) (806) (525)
--------- --------- --------- ---------
Consolidated Total $128 $1,083 -$211 $2,102
========= ========= ========= ========
THE LGL GROUP, INC.
RECONCILIATION OF NON-GAAP RESULTS
(Dollars in Thousands)
Quarter ended Six months ended
June 30, June 30,
--------------- ---------------
2007 2006 2007 2006
======= ====== ======= ======
RECONCILIATION OF NON-GAAP EBITDA
Net income as reported -$1,846 $499 -$1,372 $889
Add Back:
Provision (benefit) for income
taxes (108) 199 41 387
Interest expense 91 160 181 306
Loss from dis ops 803 299 1,178 510
Loss on Sale of Lynch 982 -- 782 --
Deduct:
Investment income 0 286 1,526 520
other income (expense) (59) 88 (8)
======= ====== ======= ======
Operating (loss) profit as
reported (137) 871 $ (766) 1,580
Depreciation and amortization 265 212 555 522
------- ------ ------- ------
Non-GAAP EBITDA $128 $1,083 -$211 $2,102
======= ====== ======= ======
Year-to-date comparisons must take into account non-recurring
expenses and gains in both years.
EBITDA is presented because it is a widely accepted financial
indicator of value and ability to incur and service debt.
EBITDA is not a substitute for operating income or cash flow from
operating activities.
THE LGL GROUP, INC.
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
30-Jun Dec. 31,
SELECTED BALANCE SHEET DATA 2007 2006*
------- --------
CASH AND CASH EQUIVALENTS $5,640 $4,429
ACCOUNTS RECEIVABLE (NET OF ALLOWANCES) $6,369 $6,472
INVENTORY $5,172 $6,105
PROPERTY PLANT AND EQUIPMENT - COST $15,461 $15,485
ASSETS HELD FOR SALE $1,521 $1,558
ASSETS FROM DISCONTINUED OPS $457 $3,788
TOTAL ASSETS $24,872 $30,957
TOTAL DEBT $6,677 $6,483
LIABILITIES FROM DISCONTINUED OPS $497 $2,141
TOTAL LIABILITIES $11,264 $14,250
SHAREHOLDERS' EQUITY $13,608 $16,707
MTRONPTI BACKLOG $9.1 million $8.1 million
SHARES OUTSTANDING 2,154,702 2,154,702
* restated with Lynch Systems as discontinued operations