The LGL (LGL) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's financial statements, management's analysis, market risk, and internal controls for the period ended June 30, 2025 Item 1. Financial Statements The company reported a net loss for Q2 and the first six months of 2025, with decreased assets, equity, and operating cash flow year-over-year Condensed Consolidated Balance Sheets The balance sheet shows a slight decrease in total assets and stockholders' equity as of June 30, 2025, compared to December 31, 2024 Condensed Consolidated Balance Sheets (in thousands) | (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $42,515 | $42,642 | | Total assets | $43,030 | $43,145 | | Total current liabilities | $881 | $904 | | Total liabilities | $1,898 | $1,905 | | Total stockholders' equity | $41,132 | $41,240 | - Cash and cash equivalents remained stable at approximately $41.7 million as of June 30, 2025, compared to $41.6 million at the end of 2024[11] Condensed Consolidated Statements of Operations The statements of operations indicate a net loss for Q2 and the first six months of 2025, a reversal from net income in the prior-year periods Condensed Consolidated Statements of Operations (in thousands, except per share data) | (in thousands, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $924 | $1,068 | $1,842 | $1,956 | | Total expenses | $955 | $831 | $1,832 | $1,640 | | Net (loss) income | $(45) | $161 | $(32) | $204 | | Net (loss) income attributable to LGL Group | $(51) | $137 | $(57) | $158 | | Diluted (Loss) income per share | $(0.01) | $0.02 | $(0.01) | $0.03 | - The company reported a net loss for both the three and six months ended June 30, 2025, compared to net income in the prior-year periods, driven by a 13.5% YoY decrease in Q2 total revenues and a 14.9% increase in Q2 total expenses[13] Condensed Consolidated Statements of Cash Flows Cash flow from operating activities decreased for the first six months of 2025, primarily due to lower net income Condensed Consolidated Statements of Cash Flows (in thousands) | (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $150 | $363 | | Increase in cash and cash equivalents | $150 | $363 | | Cash and cash equivalents at end of period | $41,735 | $41,074 | - Net cash provided by operating activities decreased to $150 thousand for the first six months of 2025 from $363 thousand in the same period of 2024, primarily due to a lower net income[22] Notes to the Condensed Consolidated Financial Statements This section provides detailed disclosures on the company's business segments, related party transactions, recent tax legislation, and foreign revenues - The company operates in two reportable business segments: Electronic Instruments (through subsidiary PTF) and Merchant Investment (through Lynch Capital)[36][37] Segment Profit (in thousands) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Electronic Instruments Segment Profit | $68 | $74 | | Merchant Investment Segment Profit | $148 | $237 | | Corporate Segment Loss | $(247) | $(74) | - The company has significant related party transactions, primarily investment activity with GAMCO Investors, Inc., which managed $35.1 million of the company's cash and cash equivalents as of June 30, 2025[84][85][86] - On July 4, 2025, the "One Big Beautiful Bill Act" (OBBBA) was enacted, introducing significant changes to U.S. federal tax law, with the company currently assessing its potential impact[98] - Total foreign revenues for the first six months of 2025 were $357 thousand, a decrease from $443 thousand in the same period of 2024, with key markets including the United Kingdom, Spain, and Australia[111] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the decline in Q2 2025 revenues and net investment income, the rise in expenses, and the company's strong liquidity position Results of Operations - Consolidated Consolidated results show a decrease in Q2 2025 total revenues and a significant increase in total expenses, leading to a substantial drop in income from operations before taxes - Q2 2025 total revenues decreased 13.5% YoY to $924 thousand, driven by a 7.5% drop in Net sales and a 20.4% decrease in Net investment income due to lower yields on investments[126][127][131] - Q2 2025 total expenses increased 14.9% YoY to $955 thousand, primarily from a 20.6% rise in Engineering, selling and administrative costs related to higher professional fees and employee expenses[126][127] - For the six months ended June 30, 2025, total revenues decreased 5.8% YoY, while total expenses increased 11.7%, leading to a significant 96.8% drop in income from operations before taxes[132][133][135] - Order backlog was $527 thousand as of June 30, 2025, a 56.8% increase from December 31, 2024, but a 28.5% decrease from June 30, 2024[138] Results of Operations - Operating Segments Operating segment results show a decline in Q2 2025 operating income for both Electronic Instruments and Merchant Investment, while the Corporate segment's pre-tax loss widened - Electronic Instruments: Q2 2025 operating income decreased 8.1% YoY to $68 thousand, mainly due to a 7.5% decline in net sales from lower backlog[140][141] - Merchant Investment: Q2 2025 operating income fell 37.6% YoY to $148 thousand, caused by a 16.8% drop in net investment income and a 46.2% increase in administrative expenses[145][146][147] - Corporate: The corporate segment's pre-tax loss widened by 233.8% YoY to $247 thousand in Q2 2025, driven by lower investment income and a 41.2% increase in administrative expenses[149][150][151] Liquidity and Capital Resources The company maintains a strong liquidity position with substantial cash and cash equivalents, sufficient for future operational needs, and no plans for cash dividends - The company held $41.7 million in cash and cash equivalents as of June 30, 2025, believing this, along with cash from operations, is sufficient to meet working capital and capital expenditure needs for the next 12 months[155][159] - Working capital stood at $41.6 million with a current ratio of 48.3 as of June 30, 2025, indicating a strong liquidity position[158] - The company has a long-standing policy of not paying cash dividends to support long-term growth objectives, with none expected in the foreseeable future[160] Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the company in this reporting period - The company states that this item is not applicable[163] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2025, the Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective[165] - There were no changes in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[166] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, other information regarding trading arrangements, and a list of exhibits filed with the report Legal Proceedings The company is not aware of any material pending legal proceedings, other than routine litigation incidental to its business - The company reports no material pending legal proceedings outside of ordinary routine litigation[168] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - The report refers to the risk factors disclosed in the 2024 Annual Report on Form 10-K and states there are no new material trends or uncertainties to report[169][170] Other Information During the second quarter of 2025, no directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No directors or officers adopted or terminated a "Rule 10b5-1 trading arrangement" or a "non-Rule 10b5-1 trading arrangement" during the three months ended June 30, 2025[171] Exhibits This section lists the exhibits filed with the Form 10-Q, including an Amended and Restated Subscription Agreement, certifications, and Inline XBRL documents - Key exhibits filed with the report include an Amended and Restated Subscription Agreement with Morgan Group Holding Co., Sarbanes-Oxley Act certifications, and XBRL data files[173]