LGL GROUP INC
For the period ended Sep 30, 2024. Filed Nov 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.
Sep 30, 2024 · Filed Nov 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 2024-06-30; filed 2024-08-13.
0001437749-24-026400
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001437749-24-034944
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 91 previous paragraphs and 89 current paragraphs.
59 unchanged; 18 reworded; 11 added; 12 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 21 previous and 25 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 (11)
Current report
Changing Interest Rates
Current report
Total revenues increased $201, or 20.6%, from $978 for the three months ended September 30, 2023 to $1,179 for the three months ended September 30, 2024. The increase was primarily driven by a $212, or 48.4%, increase in Net sales from $438 for the three months ended September 30, 2023 to $650 for the three months ended September 30, 2024 primarily due to higher product shipments during Q3 2024.
Current report
Total expenses increased $262, or 33.6%, from $779 for the three months ended September 30, 2023 to $1,041 for the three months ended September 30, 2024. The following items contributed to the overall increase:
Current report
Net income attributable to non-controlling interests decreased $4, or 18.2%, from $22 for the three months ended September 30, 2023 to $18 for the three months ended September 30, 2024 primarily due to lower Net income from LGL Systems in 2024 than in 2023.
Current report
Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
Current report
Total revenues increased $452, or 16.8%, from $2,683 for the nine months ended September 30, 2023 to $3,135 for the nine months ended September 30, 2024. The following items contributed to the overall increase:
Current report
Total expenses increased $315, or 13.3%, from $2,366 for the nine months ended September 30, 2023 to $2,681 for the nine months ended September 30, 2024. The following items contributed to the overall increase:
Current report
Income from continuing operations before income taxes decreased $26, or 37.1%, from $70 for the three months ended September 30, 2023 to $44 for the three months ended September 30, 2024. The decrease: was primarily due to:
Current report
Income from continuing operations before income taxes decreased $44, or 26.8%, from $164 for the three months ended September 30, 2023 to $120 for the three months ended September 30, 2024. The decrease was primarily due to:
Current report
Income from continuing operations before income taxes increased $5, or 2.2%, from $223 for the three months ended September 30, 2023 to $228 for the three months ended September 30, 2024. The increase was primarily due to:
Current report
Loss from continuing operations before income taxes increased $40, or 42.6%, from $94 for the three months ended September 30, 2023 to $134 for the three months ended September 30, 2024. The increase was primarily due to a $44, or 17.1%, decrease in Net investment income reflecting lower balances invested in United States Treasury money market funds partially offset by a $2, or 0.6%, decrease in Engineering, selling and administrative related to changes in headcount and higher wages and benefits.
Removed paragraphs (12)
Previous report
Inflation and Changing Interest Rates
Previous report
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 report
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 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.
Previous report
Six months ended June 30, 2024 compared to six months ended June 30, 2023
Previous 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:
Previous report
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 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:
Previous 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.
Previous report
The decrease partially offset by:
Previous report
(Loss) income from Continuing Operations Before Income Taxes
Previous 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.
Reworded paragraphs (18)
Previous 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.
Current wording
As of September 30, 2024, LGL Group had investments (classified within Cash and cash equivalents and Marketable securities) with a fair value of approximately $41.2 million, of which $24.3 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 Condensed Consolidated Balance Sheets.
Previous wording
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 wording
During the nine months ended September 30, 2024, mergers and acquisitions continued to be impacted by macroeconomic conditions such as higher borrowing costs, increased regulatory scrutiny, political uncertainty, and higher valuation expectations. 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.
Previous wording
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 wording
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 U.S. Federal Reserve decreased the federal funds rate twice totaling 75 basis points to a range of 4.50% to 4.75%. It is expected that the U.S. Federal Reserve will continue to decrease the federal funds rate during 2024 and 2025 to, among other things, control inflation; however, the timing of any future decreases remains unclear. If interest rates continue to decline, the returns generated by our investments in U.S. Treasuries could be adversely impacted.
Previous wording
Three months ended June 30, 2024compared to three months ended June 30, 2023
Current wording
Three months ended September 30, 2024 compared to three months ended September 30, 2023
Previous 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.
Current wording
Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) decreased 1,210 basis points from 55.5% for the three months ended September 30, 2023 to 43.4% for the three months ended September 30, 2024 reflecting sales of lower margin products.
Previous 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.
Current wording
Income tax expense decreased $21, or 30.4%, from $69 for the three months ended September 30, 2023 to $48 for the three months ended September 30, 2024 primarily due to the increase in Income from continuing operations.
Previous wording
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 wording
The increase was partially offset by a $390, or 101.6%, decrease in Net gains (losses) from $384 for the nine months ended September 30, 2023 to ($6) for the nine months ended September 30, 2024 primarily due to lower mark-to-market movements and no sales of Marketable securities.
Previous wording
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 wording
Gross margin (Net sales less Manufacturing cost of sales as a percentage of Net sales) decreased 360 basis points from 53.6% for the nine months ended September 30, 2023 to 50.0% for the nine months ended September 30, 2024 reflecting sales of lower margin products.
Previous wording
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 wording
Income tax expense increased $28, or 21.2%, from $132 for the nine months ended September 30, 2023 to $160 for the nine months ended September 30, 2024 primarily due to the increase in Income from continuing operations.
Previous 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.
Current wording
Net income attributable to non-controlling interests increased $42, or 190.9%, from $22 for the nine months ended September 30, 2023 to $64 for the nine months ended September 30, 2024 primarily due to the consolidation of LGL Systems in June 2023, which has minority shareholders.
Previous 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.
Current wording
As of September 30, 2024, our order backlog was $505, an increase of $362, or 253.1%, from $143 as of December 31, 2023 and an increase of $192, or 61.3%, from $313 as of September 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 $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 wording
The decrease was partially offset by a $212, or 48.4%, increase in Net sales reflecting higher product shipments during Q3 2024 and higher backlog as of June 30, 2024.
Previous wording
The decrease was partially offset by a $79, or 9.4%, increase in Net sales driven by operational efficiencies and higher product shipments.
Current wording
The decrease was partially offset by a $291, or 22.7%, increase in Net sales driven by operational efficiencies and higher product shipments.
Previous 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.
Current wording
Income from continuing operations before income taxes increased $315, or 80.8%, from $390 for the nine months ended September 30, 2023 to $705 for the nine months ended September 30, 2024. The increase was primarily due to a $380, or 70.1%, increase in Net investment income related to the commencement of operations of Lynch Capital International, LLC in June 2023 partially offset by a $65, or 42.8%, increase in Engineering, selling, and administrative driven by higher corporate-level expenses allocated to the Merchant Investment segment.
Previous 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.
Current wording
Loss from continuing operations before income taxes increased $134, or 56.5%, from ($237) for the nine months ended September 30, 2023 to ($371) for the nine months ended September 30, 2024. The increase was primarily due to a $390, or 101.6%, decrease in Net (losses) gains as there were lower mark-to-market movements and sales of Marketable securities during the nine months ended September 30, 2024.
Previous wording
As of June 30, 2024 and December 31, 2023, Cash and cash equivalents were $41,074 and $40,711, respectively.
Current wording
As of September 30, 2024 and December 31, 2023, Cash and cash equivalents were $41,602 and $40,711, respectively.
Previous 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:
Current wording
Cash provided by operating activities was $891 for the nine months ended September 30, 2024 compared to cash used in operating activities of $454 for the nine months ended September 30, 2023, an increase of $437, primarily due to a $390 decrease in Net gains (losses) from $384 for the nine months ended September 30, 2023 to ($6) for the nine months ended September 30, 2024 as there were lower mark-to-market movements and no sales of Marketable securities during the nine months ended September 30, 2024 partially offset by a $94 decrease in the net change in operating assets and liabilities from $617 for the nine months ended September 30, 2023 to $523 for the nine months ended September 30, 2024.
Previous 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.
Current wording
Cash provided by investing activities was $0 for the nine months ended September 30, 2024 compared to cash provided by investing activities of $18,816 for the nine months ended September 30, 2023, a decrease of $18,816, primarily due to sales of IronNet, Inc. during the nine months ended September 30, 2023.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Loss from Continuing Operations Before Income Taxes
Rearranged previous paragraphs (2)
Previous report — wording carried 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.
Previous report — wording carried 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.