Lgl Group, Inc. (the) · AMEX:LGL
Lgl Group, Inc. (the) — Marcum LLP's 2nd Annual MicroCap Conference (May 2013)
23 slides from Lgl Group, Inc. (the)'s conference presentation, May 30, 2013
Slide 1: The LGL Group, Inc.
The LGL Group, Inc. (NYSE MKT: LGL) Marcum LLP’s 2"? Annual MicroCap Conference May 30, 2013
Slide 2: Safe harbor statement
Safe harbor statement 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 ma
Slide 3: Corporate Snapshot
Corporate Snapshot Publicly traded global corporation Formed in 1917 IPO in 1946 MtronPTI subsidiary 1965 $30 million TTM annual revenue warch 31, 2013 Global revenue 50% outside U.S. $5.51 Stock price s,74/2013 $7.00 52-week high $14.4 million market capitalization $9.3 million cash and cash equiva
Slide 4: Attractive Investment Opportunity
Attractive Investment Opportunity We believe our stock is undervalued in the market relative to intrinsic value: $5.51 Share price as of 5/24/2013 0.3x Revenue multiple LTM compared to mean of 1.1x for peer companies $9.49 Book value $3.59 Cash and cash equivalents per share march 31, 2013 $3.16 Adj
Slide 5: MtronPTI: The Primary Brand
MtronPTI: The Primary Brand Design, manufacture and market customized high-precision components used for frequency control in electronic systems: ~50 years experience precision filter and timing solutions, industry experts Blue-chip clients long product cycles, preferred supplier relationships Diver
Slide 6: Platform Technology
Platform Technology Quartz timing used in all digital electronics Reliability leader in precision quartz oscillators Wide product range / performance / price High frequency filters essential to wireless comm ~50 years of RF, VHF, UHF, uwave filter leadership Custom / semi-custom approach supports cl
Slide 7: Critical Components for Clients' Systems
Critical Components for Clients’ Systems Products Applications Aerospace/Defense (65% revenue - 2012) Software-defined radio IED-jamming RF system Man-pack radios Next-generation UAVs Ese Orbital space communications ICT (35% revenue - 2012) Optical switches and routers Point-to-point radio systems
Slide 8: Strong Client Relationships
Strong Client Relationships We have a long history of providing custom-engineered, high-value products to a roster of blue-chip global OEM clients... Design wins drive recurring revenue; product life cycles > 5 years Focus on high performance/high reliability applications Clients commit to estimated
Slide 9: Frequency Control Value Chain
Frequency Control Value Chain % of Revenue: <A% 90% 6% % of R&D Effort: 0% 60% 40% Component design & assembly Value Chain Raw Material M/OEM End Customer ‘Technology Pyramid Industrial & 2012 Revenue by Market s oat Sen's ict 6 Marcum’s 2° Annual MicroCap Conference 5/30/2013
Slide 10: Product Strategy
Product Strategy cecal | systems | es es ASP: $450 Integrated Products Dollar Content Pursuing IP/engineering investments through joint ventures/M&A Level of Integration G ing principles for new products: + Longand sticky productlife cycle + Higher revenue per unit, higher GM + Technically-advanced,
Slide 11: Precision Timing Market: $1.3 B
Precision Timing Market: $1.3 B 2012 Crystal Oscillators ~$4B Precision Timing ~$13B ~$4 billion crystal oscillator market 6% CAGR through 2017 ative eS Japan china Fragmented, competitive Large Japanese players target consumer devices Precision players typically small divisions of large industrials
Slide 12: RF/Microwave Filter Market: $0.4 B
RF/Microwave Filter Market: $0.4 B RF/Microwave Filter Market 2012 ~ $1.1B RF/Microwave market: ~40% high performance applications Addressable = $0.4B - Precision filters $400M,919; 10% CAGR to $580Myo16 Miltary uWave Radio architectures are changing to SDR Multi-band radios driving tunable filter g
Slide 13: Small Company, Global Presence
Small Company, Global Presence ‘Over 400 people 10 salesand technical supportsites MEtrONPT EH | >: representativetirms 155,000 ft? US and India manufacturing Multiple contract factories @ Manufacturing & Sales Location © @ Manufacturing Location @ Sales Location 13 Marcum’s 2° Annual MicroCap Confe
Slide 14: Growth Strategy
Growth Strategy Extend technology and IP position * R&D investments in tunable filter platform * Investments in high-performance timing for aerospace, new materials for harsh environments * Shifting into products that are higher in the value chain (modules, subsystems), leading to higher ASP and GM
Slide 15: Management Team
Management Team Greg Anderson, President and CEO igh-tech manufacturing; Business Development Mgr. and Operations Mgr. at 3M Corporation, Imation LaDuane Clifton, CPA, Chief Financial Officer 417+ years in finance and accounting with public companies; CFO at 21, auditor at KPMG, finance/accounting a
Slide 16: Financial Review
16 Financial Review 5/30/2013,
Slide 17: Strong Operating Leverage
Strong Operating Leverage Revenue, Gross Margin and EBITDA (Sin milions excep percentages) $46.7 $15.0 $10.0 $5.0 $0.0 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 71M Qi 2013 mmm Revenue =@=Gross Margin =e=EBITDA Margin 7 Marcum’s 2° Annual MicroCap Conference 5/30/2013
Slide 18: Financial Snapshot
18 $140 $125 S124 $120 suo sioo | Fey dda 31.7% ES 20.0% Financial Snapshot 50.0% 40.0% 30.0% 72.6 S76 $74 30.754 32.55 dad 10.0% 0.0% (00.0%) 02.2010 032010 42010 QI 2011 Q22011 032011 47011 QI2012 Q22012 032012 42012 QI 2013, “© EBITDA Margin mmm Revenue —©=Gross Margin Capital Position as of: 3/3
Slide 19: Positioned for Growth
Positioned for Growth Capital position strong R&D investments in target markets organic investments (client service, ERP, software-defined radio, low noise radar, website, capacity and capabilities) harsh environment timing joint venture/M&A Key components in major clients’ systems Strong position i
Slide 20: Income Statement Highlights
Income Statement Highlights (6 in millions, except EPS) FY 2007 FY 2008 FY 2009 Fy2010 FY 2011 Fy2012 pean Revenue $ 395 $ 402 $ 313 $ 467 $ 357 $ 297 $ 299 % Change 1.6% —-28.4% = 32.9% + -30.8% — -20.1% 0.7% Gross Profit 10.2 10.4 7.4 16.4 108 aT 85 % Margin 25.7% 25.8% 23.7% 35.0% 30.2% 26.1% = 2
Slide 21: Balance Sheet Highlights
21 (S and shares in millions) Cash and Cash Equivalents % Change Cash-Adj. WC (AR + Inv - AP) % Change Net Working Capital % Change Total Assets % Change Total Debt Shareholders’ Equity Common Stock Outstanding Balance Sheet Highlights FY2007__FY2008 ~—FY2009—FY2010—FY2011_—FY2012_—Q12013 $ 52) oS 5
Slide 22: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Reconciliation of GAAP netincome to non-GAAP pre-tax earnings Computation of Adiusted Working Capital share amounts) 2007-2008 = 20082010 20nt, 202 THM 2013 n millions) eu foe. {Sin millions, exceptper sh 7 & J 32/34/2012. 3/31/2013 Netincome (GAAP) $ (26 $ (13) $ (2
Slide 23: Investment Considerations
Investment Considerations Strong capital position Flexible platform with operating leverage JV/M&A opportunities ~50 years experience MtronPTI Blue-chip clients —— Diverse markets Worldwide footprint Quality-certified, low-cost manufacturing Industry leading technology, reliability, convenience, sup
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