Lgl Group, Inc. (the) · AMEX:LGL
Lgl Group, Inc. (the) — Investor Presentation (January 2010)
35 slides from Lgl Group, Inc. (the)'s investor presentation, Jan 6, 2010
Slide 1: The LGL Group, Inc.
The LGL Group, Inc. (AMEX: LGL)
Slide 2: Safe Harbor Statement
Investor's Conference Call - 06.Jan.2010 Safe Harbor Statement This document includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, non-GAAP financial measures may be presented. These statements are based on management's
Slide 3: Agenda
Investor's Conference Call - Jan 6, 2010 Agenda + Overview of The LGL Group + Markets and Products «Financial Outlook + Strategic Discussions + Key Investment Considerations + Question and Answer
Slide 4: Overview of The LGL Group
Overview of The LGL Group
Slide 5: Highlights
Overview of The LGL Group Highlights We are a publicly traded global corporation... — Businesses have been operating since 1965 — Approximately $30 million of annual revenue — Globally diversified revenue base (approx. 50% overseas) Stock price of $3.29 @ 12/31/2009 (2-year high of $10.35) — Market
Slide 6: Mission Statement
Overview of The LGL Group Mission Statement Our mission is to: ¥ Be a leader in the design of custom frequency control and filter products within the Military-Instrumentation-Space-Avionics (MISA) and Telecommunications market segments; ¥ Build value for our customers through broad product offerings
Slide 7: Operating Highlights
Overview of The LGL Group Operating Highlights Global manufacturing and sales infrastructure — Headquarters in Orlando, FL — 71,000 square feet of manufacturing facility in Orlando with Department of Defense secret security clearance 28,000 square feet of manufacturing facility in Yankton, South Dak
Slide 8: Today's Strengths and Challenges
Overview of The LGL Group Today's Strengths and Challenges Our Historical Strengths — High quality products at the top end of the market — Great brand equity in the marketplace — Solid blue chip customer base comprised of global industrial companies — Long and successful history in the frequency/tim
Slide 9: Positioned for Profitable Growth
Overview of The LGL Group Positioned for Profitable Growth Top Line Revenue Opportunities Focused on specialty products in Military-Instrumentation-Space-Avionics (MISA) markets for growth Expanded sales coverage into the emerging high-growth markets of India and China Leverage existing preferred su
Slide 10: Markets and Products
Markets and Products
Slide 11: Key Market Dynamics
Markets and Products Key Market Dynamics Large, fragmented global market — Total market for frequency/timing components estimated at $4 billion + 26% North America + 21% Europe + 50% Asia Pacific — Majority of market focused on low end, commodity products + 80% supplies to the standardized electroni
Slide 12: Market Segments
Market Segments Distribution Measurement Industrial 7% 5% Available Global Marke “12. Markets and Products Ra xX
Slide 13: Our Target Segments
Markets and Products Our Target Segments Military, Instrumentation, Space, and Avionics (MISA) ~ Radar/Navigation Communications Electronic warfare Weaponry Instrumentation (Test & Measurement) Telecommunications & Networking Infrastructure ~ Cell phone base stations — Microwave radios for point-to-
Slide 14: Product Philosophy
Markets and Products Product Philosophy A leveraged single line business focused on highly-engineered products... — Significant potential for highly-engineered “Value Chain” products + Expand into available markets at key customers «Higher revenue per unit + Higher gross margins ~ Reinforce partners
Slide 15: Long-Term Product Goal
Markets and Products Long-Term Product Goal Guiding principles for new products: + Technically-advanced + Higher revenue per unit + Higher gross margins + Blue-Chip OEM customers “15-
Slide 16: Financial Outlook
Financial Outlook
Slide 17: Revenue Trend
Financial Summary Revenue Trend LGL Consolidated Revert «sam Note: Revenues for 2005 and a portion of 2007 includes Lynch Systems, whose operating assets were sod in 2007, 7
Slide 18: Income Statement Trends
Financial Summary Income Statement Trends {Sin milions, except EPS) Revenue Gross Profit % Margin EBITDA % Margin Net Income % Margin Earnings per Share 12.2 10.2 10.4 7.0 205% = 58% .OH 2.8% 06 03 02 © (1.2) 1.5% 0.8% 0.4% (6.3%) 1.0 (0.6) (1.3) (3.0) 23% (1.5%) 0.2%) (9.4%) 0.44 (0.26) (0.60) (1.3
Slide 19: Capital Position as of 30.Sep.2009
Financial Summary Capital Position as of 30.Sep.2009 Total Assets: $ 18.3 million Net Working Capital: $ 68 million Cash and ST Investments: $ 4.6 million Long Term Debt: $ 3.0 million Shareholders’ Equity: $ 8.3 million Available Line of Credit: $ 1.6 million The Company’s banking relationships rem
Slide 20: Key Trading Statistics
Financial Summary Key Trading Statistics — Total Shares Outstanding” — Stock Price 12/31/2009 — Equity Market Value — Current Liabilities” — Cash" — Tangible Net Worth* 2-Year Stock Price Range * Data as of Sept. 30, 2009 2.2 million $3.29 $7.3 million $6.9 million $4.6 million $8.2 million $1.29 -
Slide 21: Order Backlog
Financial Summary Order Backlog (8000's at quarter end) $14,000 $12,000 $10,000 $8,000 $8,000 $4,000 $2,000 $ 13,221 9.938 8,182 | 8,293 a4 2008 a1 2009 22 2009 3 2009 «Significant bookings during Q3 2009 has increased the total backlog by 59% compared to Q2 2009 + The backlog supports the Company's
Slide 22: Gross Margin Analysis
Financial Summary iG: Gross Margin Analysis GM032009 Volume Elfect Materials. «Labor &Bendits Fixed M2010 «TT (Projected) + This chart represents management's best assessment of what will contribute to gross margin improvement during future quarters. + The benefits of initiatives undertaken in 2009
Slide 23: Key Takeaways
Financial Summary Key Takeaways Improving Macro Market Conditions MISA companies are leading the recovery as a promising growth segment Solid bookings in 3 and 4" quarters as key MISA and Telecom customers ate rebuilding their inventories over rising industrial demand Current pipeline for 2010 over
Slide 24: Strategic Discussions
Strategic Discussions
Slide 25: Recent Activity
Strategic Discussions Recent Activity Over last nine months, we have engaged in strategic dialogues with several of our market participants regarding joint ventures, marketing partnerships, and synergistic competencies. Our key motives have been: — Opportunity for product portfolio expansion + Conti
Slide 26: Potential for Business Combinations
Strategic Discussions Potential for Business Combinations As a result of these strategic discussions, we were approached regarding a tential combination, including expressions of interest to acquire the ompany. Major incentives for a potential combination might include: — Reduced sales expenses thro
Slide 27: Internal M&A Process
Strategic Discussions Internal M&A Process To address the external interest in acquiring our Company, a Special Committee of the Board was formed comprised of independent directors. — No purchase offer has been proposed to date despite the indications of interest — In light of recent top line improv
Slide 28: Key Investment Considerations
Key Investment Considerations
Slide 29: Strategic Direction
Key Investment Considerations Strategic Direction Right-size the Company for today's macro economic cond — Clear focus on cash flow and cash preservation — Realigned manufacturing resources to take advantage of each location's primary competencies Relentless focus on improving margins — Focused engi
Slide 30: Strategic Direction
Key Investment Considerations Strategic Direction Maintain key OEM relationships — Increased focus on customer service and building supply chain flexibility for our customers — Maximize contract positions for 2010 and beyond Expand OEM position in China and India — Leverage supplier and partner rela
Slide 31: Compelling Investment Opportunity
Key Investment Considerations Compelling Investment Opportunity The Company's attributes include: — Established reputation for high quality and innovation + Custom engineering capabilities and advanced technological designs + Platform for growth into existing customer base — Global manufacturing and
Slide 32: Blue-Chip Customer Base
Key Investment Considerations Blue-Chip Customer Base (Geet The Company has a long history of providing custom-engineered, high-value products to roster of blue chip global OEM customers. 3 aleale Agilent Technologies 7 . cisco il o Raytheon’ D . ERICSSON Z -82-
Slide 33: Improved Investor Relations
Key Investment Considerations Improved Investor Relations During 2010, the Company expects to improve investor relations by... — Improve operating earnings and move to positive net income — Provide regular updates to the Company's stakeholders through the following + Petiodic conference calls at lea
Slide 34: Summary
Key Investment Considerations Summary eamlined ‘Company Structure Path to Organic L Growth & Profitability Blue-Chip Customer Base Improved Focus Markets Where Engineered Be Value & Growth Potent Improved Transparency and Investor Relations 34 é
Slide 35: Question and Answer
Question and Answer Visit us: www Jalaroup.com Www. mtronpti.com Contact us: Greg Anderson, President and CEO (E-mail: ganderson@lglaroup.com) LaDuane Clifton, Corporate Controller (E-mail: |clifton@lglgroup.com} Voice: (407) 298-2000