The LGL Group, Inc. (NYSE Amex:LGL) (the "Company"), announced results for the quarter ended September 30, 2011.
Total revenues for the three months ended September 30, 2011, were $9,629,000, a decrease of 22.3% from revenues of $12,397,000 for the three months ended September 30, 2010. Net income for the three months ended September 30, 2011, was $91,000, compared with $1,978,000 for the same period in 2010. Diluted earnings per share were $0.03 for the three months ended September 30, 2011, compared with diluted earnings per share of $0.88 for the same period in 2010. The decreases in revenue and net income primarily were the result of reduced order activity for the Military, Instrumentation, Space and Avionics ("MISA") market segment due to uncertainty related to government budget and spending cycles, as well as the effects of weakness in the global macroeconomic climate. Pre-tax earnings for the three months ended September 30, 2011, were $91,000, compared to $2,067,000 for the same period in 2010, and diluted pre-tax earnings per share were $0.03 for the three months ended September 30, 2011, compared to $0.92 for the same period in 2010. The decreases in diluted pre-tax earnings per share and diluted earnings per share were also partially attributable to the 16.0% increase in the weighted average number of shares outstanding, which was 2,609,334 for the three months ended September 30, 2011, compared to 2,249,416 for the three months ended September 30, 2010. The increase in the weighted average number of shares outstanding is due primarily to the additional 350,000 shares sold by the Company in its public offering completed in February 2011.
Total revenues for the nine months ended September 30, 2011, were $28,295,000, a decrease of 20.6% from revenues of $35,633,000 for the comparable period in 2010. Pre-tax earnings for the nine months ended September 30, 2011, were $1,011,000, compared to $5,436,000 for the same period in 2010. Net income for the nine months ended September 30, 2011, was $678,000, compared with $5,221,000 for the comparable period in 2010. Diluted earnings per share for the nine months ended September 30, 2011, were $0.26, compared with $2.32 for the same period in 2010.
Greg Anderson, LGL's President and Chief Executive Officer, said, "We have extended our trend of generating earnings to eight consecutive quarters in spite of continued weakness in the MISA market segment and also in Telecom orders in Q3 2011. As we look ahead to 2012, we believe that our work to gain market share and to continue strengthening our customer positions will allow us to harness new growth opportunities when the business cycle improves."
The Company's backlog decreased to $9,119,000 as of September 30, 2011, a decrease of 24.6% compared to the backlog of $12,093,000 as of June 30, 2011. The decrease in backlog was due primarily to a decrease in repeat orders from existing customers in both the MISA and Telecom market segments during the quarter.
Mr. Anderson noted, "We have continued to strengthen our customer positions and have seen stronger levels of design activity from both existing and new customers. We continue to make targeted investments in product development efforts that will expand our product portfolio and allow us to win market share with both existing and new customers. In addition, we are also devoting effort to our strategic framework for growth and actively seeking opportunities to expand the enterprise and create shareholder value."
Gross Margins of 28.0%; Cash from Operations of $1.6 Million
The Company had gross margins of 28.0% for the three months ended September 30, 2011, compared to 37.6% for the same period in 2010. The decrease was primarily due to spreading fixed costs over reduced revenues compared to the same period in 2010. Mr. Anderson noted, "We are working to maintain discipline in keeping both variable and structural costs in line with revenue levels as we seek to manage effectively through the current business cycle."
The Company generated $1,600,000 in cash from operations for the nine months ended September 30, 2011, compared to $3,024,000 for the same period in 2010. Cash-adjusted working capital, which is comprised of accounts receivable plus inventory less trade accounts payable, was $9,630,000 at September 30, 2011, compared to $9,696,000 at December 31, 2010.
Total cash and cash equivalents as of September 30, 2011 was $13,716,000 compared to $10,985,000 as of June 30, 2011. The increase of $2,731,000 is due to primarily to a drawdown on the Company's revolving line of credit, offset by the Company's use of cash in investing activities during the three months ended September 30, 2011, of $119,000 for expansion of equipment and facilities for new product development, and investment in software to replace the Company's existing enterprise resource planning systems, as well as a use of cash of $315,000 for repurchases of approximately 35,000 shares of the Company's common stock completed during the three months ended September 30, 2011. Total debt as of September 30, 2011, was $3,834,000 compared to $669,000 at December 31, 2010.
Mr. Anderson said, "The Company remains well-positioned with a strong balance sheet and capital flexibility, which provides a strong foundation point from which to pursue our strategic framework for growth."