Business Segments and Operations - The LGL Group operates through two segments: Electronic Components and Electronic Instruments, focusing on high-reliability frequency and spectrum control products[24]. - MtronPTI's product offerings include quartz crystal resonators and various types of oscillators, designed for applications requiring high reliability in harsh environments[30]. - PTF's Frequency and Time Reference Standards include GPS/GNS disciplined quartz frequency standards, which are critical for satellite communications[36]. - The company remains dependent on a single line of business, with virtually all revenues derived from electronic components[69]. Financial Performance - Total revenues for 2021 were 3,022,000, or 9.7%, from 14,638,000, a significant increase from 786,000) for 2021, compared to operating income of 2.77, compared to 59,453,000 for 2021, compared to a loss of (16,962,000) for 2021, compared to 22,949,000) for 2021, with significant losses attributed to IRNT common stock[159]. - Cash provided by operating activities decreased to 3.2 million in 2020, primarily due to lower operating earnings[173]. Customer Concentration and Revenue Sources - In 2021, the largest customer accounted for 3.14 million, or 11.2%[42]. - As of December 31, 2021, four of the largest customers accounted for approximately 53.2% of accounts receivable, highlighting customer concentration risk[43]. - Domestic revenues in 2021 were 23,752,000 or 76.2% in 2020[49]. - International revenues in 2021 were 7,410,000 or 23.8% in 2020[50]. - The majority of the company's revenues in 2021 and 2020 were derived from sales to manufacturers in the defense, aerospace, instrumentation, and industrial markets, with expectations for continued revenue from these sectors in 2022[78]. Spin-Off and Corporate Strategy - The Spin-Off of MtronPTI is intended to allow shareholders to evaluate the performance of each entity independently, pending stockholder approval[19]. - The Company plans to complete a Spin-Off of MtronPTI, subject to stockholder approval, creating two separate publicly-traded companies[180]. - The Spin-Off is expected to allow each entity to pursue distinct business strategies and capital allocation policies, potentially enhancing shareholder value[181]. - MtronPTI may face challenges in meeting capital needs post-Spin-Off due to the loss of financial support from the parent company[124]. Risks and Challenges - The COVID-19 pandemic has led to increased raw material prices and disruptions in global supply chains, affecting operations[67]. - The company faces risks related to supply chain inefficiencies and limited visibility in forecasting revenue projections due to the cyclical nature of its markets[78]. - The company is subject to significant procurement regulations as a supplier to U.S. Government defense contractors, which could increase compliance costs and affect operating margins[89]. - The company competes in highly competitive markets, with larger competitors having greater financial resources and capabilities, which could impact its operating results[86]. - The company may experience operational inefficiencies if it fails to integrate acquired businesses successfully, which could adversely affect financial condition and results[83]. Governance and Internal Controls - The management concluded that internal controls over financial reporting were effective as of December 31, 2021[197]. - The company is focused on maintaining adequate internal controls as part of its governance strategy[197]. - The board includes members with experience in mergers and acquisitions, enhancing the company's strategic capabilities[205]. - The Audit Committee consists of three members, all of whom are financially literate and independent under NYSE listing standards[212]. Shareholder Information - As of March 10, 2022, officers, directors, and 10% or greater stockholders control approximately 38.7% of the voting power of the outstanding shares[110]. - The common stock price fluctuated between 9.90 during the year 2021, indicating significant volatility in the market[108]. - The distribution of MtronPTI common stock may not qualify for tax-free treatment, potentially resulting in tax liabilities for stockholders[122].
The LGL (LGL) - 2021 Q4 - Annual Report