Lgl Group, Inc. (the) · AMEX:LGL
Lgl Group, Inc. (the) — The LGL Group — Marcum LLP's 2nd Annual MicroCap Conference 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 2nd 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 March 31, 2013 Global revenue 50% outside U.S. $5.51 Stock price 5/24/2013 $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: Enabling High Performance in Diverse Markets
Enabling High Performance in Diverse Markets Platform Technology High Performance Markets Quartz timing used in all digital electronics Reliability leader in precision quartz oscillators ICT Defense Wide product range / performance / price High frequency filters essential to wireless comm ~50 years
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 Orbital space communications ICT (35% revenue - 2012) Optical switches and routers Point-to-point radio systems Wire
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 a
Slide 9: Frequency Control Value Chain
Frequency Control Value Chain % of Revenue: <4% 90% 6% % of R&D Effort: 0% 60% 40% Value Chain Integrated Component Final system Raw quartz, prelim. Crystal module Final design & design & processing & supply finishing design & Product assembly assembly assembly Raw Material Component CM/OEM End Cust
Slide 10: Product Strategy: Dollar Content
Product Strategy ASP: $50,000 Systems ASP: $5,000 Dollar Content Subsystems ASP: $450 Integrated Products ASP: $2 Pursuing Components IP/engineering investments through joint ventures/M&A Level of Integration Guiding principles for new products: • Long and sticky product life cycle • Higher revenue
Slide 11: Precision Timing Market: $1.3 B
Precision Timing Market: $1.3 B 2012 Crystal Oscillators ~ $4 B Precision Timing ~ $1.3 B ~$4 billion crystal oscillator market Others 6% CAGR through 2017 Taiwan 1Source: Databeans 2012 Timing Devices Report Japan 67% EU & Consumer 33% Non- N.A. (primarily Consumer produced in Asia) China Source: c
Slide 12: RF/Microwave Filter Market: $0.4 B
RF/Microwave Filter Market: $0.4 B RF/Microwave Filter Market RF/Microwave market: ~40% high performance applications 2012 ~ $1.1B Addressable = $0.4B - Precision filters $400M2012; 10% CAGR to $580M2016 Base Sta. Cavity Military uWave LC Radio architectures are changing to SDR Cell SAW Multi-band r
Slide 13: Small Company, Global Presence
Small Company, Global Presence Over 400 people 10 sales and technical support sites >30 representative firms 155,000 ft2 US and India manufacturing Multiple contract factories ISO9001 AS9100C ISO9001 ISO9001 AS9100C 13 Marcum’s 2nd Annual MicroCap Conference 5/30/2013
Slide 14: Growth Strategy
Growth Strategy Extend technology and IP position • R&D investments in tunable filter platform • Investments in high-performance timing for aerospace, new materials for harsh environments • Shifting into products that are higher in the value chain (modules, subsystems), leading to higher ASP and GM
Slide 15: Management Team
Management Team Greg Anderson, President and CEO 24+ years in high-tech manufacturing; Business Development Mgr. and Operations Mgr. at 3M Corporation, Imation LaDuane Clifton, CPA, Chief Financial Officer 17+ years in finance and accounting with public companies; CFO at a21, auditor at KPMG, financ
Slide 16: Financial Review
Financial Review 16 Marcum’s 2nd Annual MicroCap Conference 5/30/2013
Slide 17: Strong Operating Leverage
Strong Operating Leverage Revenue, Gross Margin and EBITDA ($ in millions, except percentages) Note: Revenues for 2006 through a portion of 2007 are adjusted to exclude Lynch Systems, whose operating assets were sold in 2007. 17 Marcum’s 2nd Annual MicroCap Conference 5/30/2013
Slide 18: Financial Snapshot
Financial Snapshot Capital Position as of: 3/31/2013 12/31/2012 Total Assets $ 28.9M $ 29.6M • Cash and cash equivalents of $3.59 per share at 03/31/2013 Net Working Capital 16.6M 16.6M Cash-Adjusted Working Capital 8.2M 7.2M • Cash-adjusted working capital of $3.16 per share at Cash and Cash Equiva
Slide 19: Positioned for Growth
Positioned for Growth Capital position strong R&D investments in target markets organic investments (client service, ERP, software-defined radio, low noise radar, website, capacity and capabilities) harsh environment timing joint venture/M&A Key components in major clients’ systems Strong position i
Slide 20: Income Statement Highlights
Income Statement Highlights TTM 2013 ($ in millions, except EPS) FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 A: Q1 2013 Revenue $ 39.5 $ 40.2 $ 31.3 $ 46.7 $ 35.7 $ 29.7 $ 29.9 % Change 1.6% -28.4% 32.9% -30.8% -20.1% 0.7% Gross Profit 10.2 10.4 7.4 16.4 10.8 7.7 8.5 % Margin 25.7% 25.8% 23.7% 3
Slide 21: Balance Sheet Highlights
Balance Sheet Highlights ($ and shares in millions) FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 Q1 2013 Cash and Cash Equivalents $ 5.2 $ 5.3 $ 3.8 $ 4.1 $ 13.7 $ 10.1 $ 9.3 % Change 1.7% -39.5% 8.0% 69.7% -35.4% -8.6% Cash-Adj. WC (AR + Inv - AP) $ 9.0 $ 9.5 $ 7.8 $ 9.7 $ 8.2 $ 7.2 $ 8.2 % Chan
Slide 22: GAAP to Non-GAAP Reconciliations
GAAP to Non-GAAP Reconciliations Reconciliation of GAAP net income to non-GAAP pre-tax earnings Computation of Adjusted Working Capital: As of As of ($ in millions, except per share amounts) 2007 2008 2009 2010 2011 2012 TTM 2013 ($ in millions) 12/31/2012 3/31/2013 Net Income (GAAP) $ (2.6) $ (1.3)
Slide 23: Investment Considerations
Investment Considerations Strong capital position Flexible platform with operating leverage JV/M&A opportunities ~50 years experience Blue-chip clients Diverse markets Worldwide footprint Quality-certified, low-cost manufacturing Industry leading technology, reliability, convenience, support 23 Marc
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