LGL GROUP INC
For the period ended Jun 30, 2024. Filed Aug 13, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 13, 2024
LGL$6.63+1.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001437749-24-017094
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-13.
0001437749-24-026400
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 67 previous paragraphs and 91 current paragraphs.
49 unchanged; 14 reworded; 20 added; 3 removed; 1 previous and 8 current paragraphs rearranged.
Tables are not compared: 12 previous and 21 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
Market Conditions and Search Process
Current report
During the first half of 2024, mergers and acquisitions continued to be impacted by macroeconomic conditions such as higher borrowing costs, inflationary pressures, increased regulatory scrutiny, and political uncertainty. The initial public offering ("IPO") market has been relatively weak with continued pressure on private equity sponsors to monetize their portfolio companies, which has improved the pace and quality of deal flow to our team.
Current report
Our search process leverages our professional networks and relationships, participation in industry events and conferences, monitoring of industry trends and news, and interactions with our shareholders, investment banks, and other intermediaries. We continue to seek small- to mid-sized opportunities with strong cash flow generating capacity that trade at reasonable multiples with competitive products or services and with defensible market positions or intellectual property.
Current report
Total expenses decreased $22, or 2.6%, from $853 for the three months ended June 30, 2023 to $831 for the three months ended June 30, 2024. The decrease was primarily due to a $28, or 4.3%, decrease in Engineering, selling and administrative from $645 for the three months ended June 30, 2023 to $617 for the three months ended June 30, 2024 driven by lower accounting and other professional fees.
Current report
Six months ended June 30, 2024 compared to six months ended June 30, 2023
Current report
Total Revenues
Current report
Total revenues increased $251, or 14.7%, from $1,705 for the six months ended June 30, 2023 to $1,956 for the six months ended June 30, 2024. The following items contributed to the overall increase:
Current report
The increase was partially offset by a $392, or 101.0%, decrease in Net gains (losses) from $388 for the six months ended June 30, 2023 to ($4) for the six months ended June 30, 2024 primarily due to lower mark-to-market movements of Marketable securities and no sales of Marketable securities.
Current report
Total Expenses
Current report
Gross Margin
Current report
Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) increased 210 basis points from 52.6% for the six months ended June 30, 2023 to 54.7% for the six months ended June 30, 2024 reflecting increased sales of higher margin products.
Current report
Income Tax Expense
Current report
Income tax expense increased $49, or 77.8%, from $63 for the six months ended June 30, 2023 to $112 for the six months ended June 30, 2024 primarily due to the increase in Income from continuing operations.
Current report
Income from continuing operations before income taxes increased $52, or 236.4%, from $22 for the three months ended June 30, 2023 to $74 for the three months ended June 30, 2024. The increase was primarily due to a $128, or 31.8%, increase in Net sales reflecting higher product shipments during Q2 2024 and higher backlog as of March 31, 2024 partially offset by a $70, or 40.5%, increase in Engineering, selling and administrative driven by higher wages and benefits.
Current report
Income from continuing operations before income taxes decreased $18, or 19.1%, from $94 for the six months ended June 30, 2023 to $76 for the six months ended June 30, 2024. The decrease was primarily due to:
Current report
The decrease was partially offset by a $79, or 9.4%, increase in Net sales driven by operational efficiencies and higher product shipments.
Current report
Loss from Continuing Operations Before Income Taxes
Current report
Loss from continuing operations before income taxes decreased $80, or 51.9%, from $154 for the three months ended June 30, 2023 to $74 for the three months ended June 30, 2024. The decrease was primarily due to a $176, or 37.3%, decrease in Engineering, selling and administrative related to lower accounting and other professional service fees as well as other administrative and corporate expenses.
Current report
The decrease partially offset by:
Current report
The decrease was partially offset by a $171, or 20.4%, decrease in Engineering, selling and administrative reflecting lower accounting and other professional service fees as well as other administrative and corporate expenses.
Removed paragraphs (3)
Previous report
The decrease is partially offset by:
Previous report
Income tax expense decreased $29, or 44.6%, from $65 for the three months ended March 31, 2023 to $36 for the three months ended March 31, 2024 primarily due to the decrease in Income from continuing operations.
Previous report
Income from continuing operations before income taxes decreased $70, or 97.2%, from $72 for the three months ended March 31, 2023 to $2 for the three months ended March 31, 2024. The decrease was primarily due to a $49, or 11.1%, decrease in Net sales reflecting lower backlog in Q4 2023.
Reworded paragraphs (14)
Previous wording
As of March 31, 2024, LGL had investments (classified within Cash and cash equivalents and Marketable securities) with a fair value of approximately $23.8 million. The Company accounts for its Marketable securities under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 321,Investments - Equity Securities ("ASC 321") and as such, its Marketable securities are reported at fair value on its consolidated balance sheets.
Current wording
As of June 30, 2024, LGL Group had investments (classified within Cash and cash equivalents and Marketable securities) with a fair value of approximately $41.1 million, of which $24.1 million was held within the Merchant Investment business. The Company accounts for its Marketable securities under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 321,Investments - Equity Securities ("ASC 321") and as such, its Marketable securities are reported at fair value on its Consolidated Balance Sheets.
Previous wording
Inflation in the United States decreased from 6.5% as of December 31, 2022 to 3.4% as of December 31, 2023, which is still above the U.S. Federal Reserve's long-term target of 2.0%. The continued higher inflationary conditions may have an adverse impact on our Manufacturing cost of sales and Engineering, selling and administrative expenses, as these costs could increase at a rate higher than our revenue. The U.S. Federal Reserve raised the federal funds rate a total of four times throughout 2023, resulting in a range from 5.25% to 5.50% as of December 31, 2023. Through the date of filing of this Quarterly Report on Form 10-Q, the Federal Reserve has maintained the federal funds rate in the same range as of December 31, 2023. It is expected that the U.S. Federal Reserve will continue to hold the federal funds rate steady or start to decrease it during 2024 to, among other things, control inflation; however, the timing of any such decrease remains unclear. As a result, we have increased the prices we charge our customers.
Current wording
Inflation in the United States decreased from 6.5% as of December 31, 2022 to 3.4% as of December 31, 2023, which is still above the U.S. Federal Reserve's long-term target of 2.0%. Through the date of filing of this Quarterly Report on Form 10-Q, inflation has further decreased to 3.0%. Although inflation is expected to continue to decrease in 2024, the continued higher inflationary conditions may have an adverse impact on our Manufacturing cost of sales and Engineering, selling and administrative expenses, as these costs could increase at a rate higher than our revenue. As a result, we have increased the prices we charge our customers.
Previous wording
Three months ended March 31, 2024*** compared to three months ended March 31, 2023***
Current wording
Three months ended June 30, 2024compared to three months ended June 30, 2023
Previous wording
Total revenues decreased $96, or 9.8%, from $984 for the three months ended March 31, 2023 to $888 for the three months ended March 31, 2024. The following items contributed to the overall decrease:
Current wording
Total revenues increased $347, or 48.1%, from $721 for the three months ended June 30, 2023 to $1,068 for the three months ended June 30, 2024. The following items contributed to the overall increase:
Previous wording
Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) decreased 850 basis points from 56.5% for the three months ended March 31, 2023 to 48.0% for the three months ended March 31, 2024 reflecting a lower margin product mix and higher labor costs.
Current wording
Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) increased 1,130 basis points from 48.4% for the three months ended June 30, 2023 to 59.7% for the three months ended June 30, 2024 reflecting increased sales of higher margin products.
Previous wording
Income from Continuing Operations Before Income Taxes
Current wording
Income tax expense (benefit) increased $78, or 3900.0%, from ($2) for the three months ended June 30, 2023 to $76 for the three months ended June 30, 2024 primarily due to the increase in Income from continuing operations.
Previous wording
Net income attributable to non-controlling interests increased $22 from $0 for the three months ended March 31, 2023 to $22 for the three months ended March 31, 2024 primarily due to the consolidation of LGL Systems in June 2023, which has minority shareholders.
Current wording
Net income attributable to non-controlling interests increased $24 from $0 for the three months ended June 30, 2023 to $24 for the three months ended June 30, 2024 primarily due to the consolidation of LGL Systems in June 2023, which has minority shareholders.
Previous wording
Total expenses increased $75, or 10.2%, from $734 for the three months ended March 31, 2023 to $809 for the three months ended March 31, 2024. The increase was primarily due to a $63, or 11.6%, increase in Engineering, selling and administrative from $542 for the three months ended March 31, 2023 to $605 for the three months ended March 31, 2024 driven by higher wages and benefits.
Current wording
Total expenses increased $53, or 3.3%, from $1,587 for the six months ended June 30, 2023 to $1,640 for the six months ended June 30, 2024. The increase was primarily due to a $35, or 2.9%, increase in Engineering, selling and administrative from $1,187 for the six months ended June 30, 2023 to $1,222 for the six months ended June 30, 2024 driven by higher wages and benefits.
Previous wording
As of March 31, 2024, our order backlog was $341, an increase of $198, or 138.5%, from $143 as of December 31, 2023 and a decrease of $58, or 14.5%, from $399 as of March 31, 2023. The backlog of unfilled orders includes amounts based on signed contracts likely to be fulfilled largely in the next 12 months but usually will ship within the next 90 days. Order backlog is adjusted quarterly to reflect project cancellations, deferrals, and revised project scope and cost, if any.
Current wording
As of June 30, 2024, our order backlog was $737, an increase of $594, or 415.4%, from $143 as of December 31, 2023 and an increase of $413, or 127.5%, from $324 as of June 30, 2023. The backlog of unfilled orders includes amounts based on signed contracts likely to be fulfilled largely in the next 12 months but usually will ship within the next 90 days. Order backlog is adjusted quarterly to reflect project cancellations, deferrals, and revised project scope and cost, if any.
Previous wording
Income from continuing operations before income taxes increased $240 from $0 for the three months ended March 31, 2023 to $240 for the three months ended March 31, 2024 due to the commencement of operations of Lynch Capital International, LLC in June 2023.
Current wording
Income from continuing operations before income taxes increased $237 from $0 for the three months ended June 30, 2023 to $237 for the three months ended June 30, 2024 due to the commencement of operations of Lynch Capital International, LLC in June 2023.
Previous wording
(Loss) income from continuing operations before income taxes decreased $341, or 191.6%, from $178 for the three months ended March 31, 2023 to ($163) for the three months ended March 31, 2024. The decrease was primarily due to a $348, or 100.9%, decrease in Net (losses) gains as there were lower mark-to-market movements of Marketable securities during the three months ended March 31, 2024.
Current wording
(Loss) income from continuing operations before income taxes decreased $261, or 1087.5%, from $24 for the six months ended June 30, 2023 to ($237) for the six months ended June 30, 2024. The decrease was primarily due to a $392, or 101.0%, decrease in Net (losses) gains as there were lower mark-to-market movements and sales of Marketable securities during the six months ended June 30, 2024.
Previous wording
As of March 31, 2024 and December 31, 2023, Cash and cash equivalents were $40,871 and $40,711, respectively.
Current wording
As of June 30, 2024 and December 31, 2023, Cash and cash equivalents were $41,074 and $40,711, respectively.
Previous wording
Cash provided by operating activities was $160 for the three months ended March 31, 2024 compared to cash used in operating activities of $50 for the three months ended March 31, 2023, an increase of $210, primarily due to the following:
Current wording
Cash provided by operating activities was $363 for the six months ended June 30, 2024 compared to cash used in operating activities of $9 for the six months ended June 30, 2023, an increase of $372, primarily due to the following:
Previous wording
Cash provided by investing activities was $0 for the three months ended March 31, 2024 compared to cash provided by investing activities of $43 for the three months ended March 31, 2023, a decrease of $43, primarily due to sales of IronNet, Inc. during the three months ended March 31, 2023.
Current wording
Cash provided by investing activities was $0 for the six months ended June 30, 2024 compared to cash provided by investing activities of $18,816 for the six months ended June 30, 2023, a decrease of $18,816, primarily due to sales of IronNet, Inc. during the six months ended June 30, 2023.
Rearranged current paragraphs (8)
Current report — wording carried from elsewhere
The U.S. Federal Reserve raised the federal funds rate a total of four times throughout 2023, resulting in a range from 5.25% to 5.50% as of December 31, 2023. Through the date of filing of this Quarterly Report on Form 10-Q, the Federal Reserve has maintained the federal funds rate in the same range as of December 31, 2023. It is expected that the U.S. Federal Reserve will continue to hold the federal funds rate steady or start to decrease it during 2024 to, among other things, control inflation; however, the timing of any such decrease remains unclear. If interest rates start to decline, the returns generated by our investments in U.S. Treasuries could be adversely impacted.
Current report — wording carried from elsewhere
The following table presents our Condensed Statements of Operations for the periods indicated:
Current report — wording carried from elsewhere
Net Income Attributable to Non-Controlling Interests
Current report — wording carried from elsewhere
Net income attributable to non-controlling interests increased $46 from $0 for the six months ended June 30, 2023 to $46 for the six months ended June 30, 2024 primarily due to the consolidation of LGL Systems in June 2023, which has minority shareholders.
Current report — wording carried from elsewhere
The following table presents income from continuing operations of our Electronic Instruments segment for the periods indicated:
Current report — wording carried from elsewhere
The following table presents income from continuing operations of our Merchant Investment segment for the periods indicated:
Current report — wording carried from elsewhere
Income from continuing operations before income taxes increased $477 from $0 for the six months ended June 30, 2023 to $477 for the six months ended June 30, 2024 due to the commencement of operations of Lynch Capital International, LLC in June 2023.
Current report — wording carried from elsewhere
The following table presents income from continuing operations of our Corporate segment for the periods indicated:
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Income from Continuing Operations Before Income Taxes