Written by Ken Nagy, CFA
On November 11, 2010 The LGL Group (LGL) announced results for the third quarter of fiscal year 2010 ending September 2010. Revenue for the period was $12.4 million falling slightly sequentially from $12.4 million and up 69.3% year over year. MISA contracts won in the second half of 2009 have begun to contribute significantly to revenue. The contracts deal with military personnel protection and homeland security.
Foreign Sales Increase
Increase in demand continued to be reflected in foreign sales, primarily to Asia, which grew 52.0% to approximately $5,724,000 for the quarter ended September 30, 2010, compared to approximately $3,765,000 for the comparable period in 2009. LGL’s new sales office in Shanghai, China was fully registered with the Chinese government during the quarter.
At quarter end the company’s backlog was $11,973,000, which was a decrease of 16.7% compared to the backlog of approximately $14,373,000 as of June 30, 2010. The reduction in backlog was primarily due to softer short-term demand in repeat orders from customers in the Telecom market segment combined with strong shipments from production facilities during the third quarter 2010.
Looking at the balance sheet working capital increased to $10,904,000 as of September 30, 2010, compared to $5,466,000 as of December 31, 2009, an increase of 99.5%. The increase in working capital was primarily due to increases in accounts receivable and inventory balances. In addition, on September 30, 2010, the Company repaid the remaining $2,282,000 of principal and interest due under its term loan with RBC Bank and terminated the related loan agreement. Also, the Company’s balance under its revolving credit facility with First National Bank of Omaha was $0 as of September 30, 2010.
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