Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 11, 2022 | |
Cover [Abstract] | ||
Entity Registrant Name | M-TRON INDUSTRIES, INC. | |
Entity Central Index Key | 0001902314 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | No | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 2,726,798 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2022 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Trading Symbol | MPTI | |
Entity Shell Company | false | |
Entity File Number | 001-41391 | |
Entity Tax Identification Number | 46-0457944 | |
Entity Address, Address Line One | 2525 Shader Rd | |
Entity Address, City or Town | Orlando | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 32804 | |
City Area Code | 407 | |
Local Phone Number | 298-2000 | |
Entity Incorporation, State or Country Code | DE | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Title of 12(b) Security | Common Stock, par value $0.01 | |
Security Exchange Name | NYSEAMER | |
Entity Interactive Data Current | Yes |
Condensed Combined Balance Shee
Condensed Combined Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 |
Current Assets: | |||
Cash and cash equivalents | $ 806 | $ 2,635 | $ 1,843 |
Accounts receivable, net of allowances of $128, $119 and $118, respectively | 5,336 | 3,995 | 4,456 |
Inventories, net | 7,298 | 5,221 | 5,007 |
Prepaid expenses and other current assets | 142 | 242 | 255 |
Total Current Assets | 13,582 | 12,093 | 11,561 |
Property, Plant and Equipment | |||
Land | 536 | 536 | 536 |
Buildings and improvements | 4,877 | 4,869 | 4,869 |
Machinery and equipment | 18,831 | 18,176 | 17,836 |
Gross property, plant and equipment | 24,244 | 23,581 | 23,241 |
Less: accumulated depreciation | (20,685) | (20,199) | (20,060) |
Net property, plant and equipment | 3,559 | 3,382 | 3,181 |
Right-of-use lease asset | 160 | 218 | 148 |
Due from related party | 4,465 | 1,969 | 1,484 |
Intangible assets, net | 112 | 152 | 165 |
Deferred income tax asset | 1,885 | 2,187 | 2,308 |
Other assets | 18 | 5 | 8 |
Total Assets | 23,781 | 20,006 | 18,855 |
Current Liabilities: | |||
Accounts payable | 2,975 | 1,396 | 824 |
Accrued compensation and commissions expense | 1,267 | 1,213 | 875 |
Other accrued expenses | 405 | 403 | 443 |
Income Tax Payable | 79 | ||
Total Current Liabilities | 4,726 | 3,012 | 2,142 |
Long-term lease liability | 91 | 145 | 99 |
Total Liabilities | 4,817 | 3,157 | 2,241 |
Contingencies (Note G) | |||
Equity | |||
Net investment by LGL Group, Inc. | 18,964 | 16,849 | 16,614 |
Total Equity | 18,964 | 16,849 | 16,614 |
Total Liabilities and Equity | $ 23,781 | $ 20,006 | $ 18,855 |
Condensed Combined Balance Sh_2
Condensed Combined Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 |
Statement Of Financial Position [Abstract] | |||
Accounts receivable, allowances | $ 128 | $ 119 | $ 118 |
Condensed Combined Statements o
Condensed Combined Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
REVENUES | $ 8,417 | $ 7,173 | $ 23,172 | $ 19,834 |
Type of Revenue [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember | us-gaap:ProductMember |
Costs and expenses: | ||||
Manufacturing cost of sales | $ 5,688 | $ 4,636 | $ 14,919 | $ 12,838 |
Engineering, selling and administrative | 2,099 | 1,716 | 6,206 | 5,080 |
OPERATING INCOME | 630 | 821 | 2,047 | 1,916 |
Other (Expense) Income: | ||||
Interest expense, net | (1) | (3) | (6) | (9) |
Other (expense) income, net | (15) | (18) | (41) | 21 |
Total other (expense) income, net | (16) | (21) | (47) | 12 |
INCOME BEFORE INCOME TAXES | 614 | 800 | 2,000 | 1,928 |
Income tax provision | 111 | 162 | 392 | 372 |
NET INCOME | $ 503 | $ 638 | $ 1,608 | $ 1,556 |
Net Income per Basic Share | $ 0.19 | $ 0.24 | $ 0.60 | $ 0.58 |
Net income per Dilutive Share | $ 0.19 | $ 0.24 | $ 0.60 | $ 0.58 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Stockholder's Equity (Unaudited) - USD ($) $ in Thousands | Total | LGL Group, Inc. |
Balance at Dec. 31, 2020 | $ 14,974 | |
Net income | 281 | |
Net transfers to LGL Group, Inc. | 47 | |
Balance at Mar. 31, 2021 | 15,302 | |
Balance at Dec. 31, 2020 | 14,974 | |
Net income | $ 1,556 | |
Net transfers to LGL Group, Inc. | (22) | 84 |
Balance at Sep. 30, 2021 | 16,614 | 16,614 |
Balance at Mar. 31, 2021 | 15,302 | |
Net income | 637 | |
Net transfers to LGL Group, Inc. | 42 | |
Balance at Jun. 30, 2021 | 15,981 | |
Net income | 638 | 638 |
Net transfers to LGL Group, Inc. | (5) | |
Balance at Sep. 30, 2021 | 16,614 | 16,614 |
Balance at Dec. 31, 2021 | 16,849 | 16,849 |
Net income | 619 | |
Net transfers to LGL Group, Inc. | 240 | |
Balance at Mar. 31, 2022 | 17,708 | |
Balance at Dec. 31, 2021 | 16,849 | 16,849 |
Net income | 1,608 | |
Net transfers to LGL Group, Inc. | 145 | 507 |
Balance at Sep. 30, 2022 | 18,964 | 18,964 |
Balance at Mar. 31, 2022 | 17,708 | |
Net income | 486 | |
Net transfers to LGL Group, Inc. | 109 | |
Balance at Jun. 30, 2022 | 18,303 | |
Net income | 503 | 503 |
Net transfers to LGL Group, Inc. | 158 | |
Balance at Sep. 30, 2022 | $ 18,964 | $ 18,964 |
Condensed Combined Statements_2
Condensed Combined Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
OPERATING ACTIVITIES | ||
Net income | $ 1,608 | $ 1,556 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 486 | 349 |
Amortization of finite-lived intangible assets | 40 | 41 |
Stock-based compensation expense | 362 | 106 |
Deferred income tax expense | 302 | 386 |
Changes in operating assets and liabilities: | ||
Increase in accounts receivable, net | (1,341) | (508) |
(Increase) decrease in inventories, net | (2,077) | 98 |
Decrease (increase) in prepaid expenses and other assets | 107 | (14) |
Increase (decrease) in accounts payable, accrued compensation and commissions expense and other | 1,718 | (648) |
Net cash provided by operating activities | 1,205 | 1,366 |
INVESTING ACTIVITIES | ||
Capital expenditures | (663) | (759) |
Net cash used in investing activities | (663) | (759) |
FINANCING ACTIVITIES | ||
Net transfers to LGL Group, Inc. | 145 | (22) |
Prepaid financing costs | (20) | |
Payments to related party | (2,496) | (1,198) |
Net cash used in financing activities | (2,371) | (1,220) |
Decrease in cash and cash equivalents | (1,829) | (613) |
Cash and cash equivalents at beginning of period | 2,635 | 2,456 |
Cash and cash equivalents at end of period | $ 806 | $ 1,843 |
Background and Description of B
Background and Description of Business | 9 Months Ended |
Sep. 30, 2022 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Background and Description of Business | A. Background and Description of Business The Separation On August 3, 2022, The LGL Group, Inc. (“LGL Group” or “LGL”) announced that its Board of Directors approved the previously announced separation of the business of M-tron Industries, Inc. (the “Company,” “MtronPTI,” “MPTI,” “we,” “our,” or “us”) into an independent, publicly traded company (the "Separation"). Prior to the Separation, LGL Group operated its electronic instruments business segment through its wholly-owned subsidiary, Precise Time and Frequency (“PTF”) and its electronic components business segment through MtronPTI. On October 7, 2022 (the “Distribution Date”), the Separation of the MtronPTI business was completed, and we became an independent, publicly traded company trading on the NYSE American under the stock symbol "MPTI." The Separation was achieved through LGL Group’s distribution (the “Distribution”) of 100% of the shares of the Company's common stock to holders of LGL Group's common stock as of the close of business on September 30, 2022, the record date for the Distribution. LGL Group's stockholders of record received one-half share of the Company's common stock for every share of LGL Group's common stock held by them. In connection with the Separation, the Company wrote off $4,439,000 of intercompany receivables due from LGL Group and made a cash payment of approximately $6,000 to LGL Group on October 7, 2022, which brought intercompany balances to zero and cash to $1,000,000. LGL Group retained no ownership interest in the Company following the Separation. Description of Business The Company was founded in 1965 and is engaged in the design, manufacturing and marketing of highly-engineered, high reliability frequency and spectrum control products used to control the frequency or timing of signals in electronic circuits. The Company’s operations include its two principal subsidiaries, (1) Piezo Technology, Inc. ("PTI") and (2) M-tron Asia, LLC ("Mtron"). The Company has operations in Orlando, Florida; Yankton, South Dakota; and Noida, India, and has sales offices in Austin, Texas and Hong Kong. The Company and its subsidiaries currently operate together as a single group under the MtronPTI brand. The Company offers a wide range of precision frequency control and spectrum control solutions including: RF, microwave and millimeter wave filters; cavity, crystal, ceramic, lumped element and switched filters; high performance and high frequency OCXOs, integrated PLL OCXOs, TCXOs, VCXOs, low jitter and harsh environment oscillators; crystal resonators, Integrated Microwave Assemblies (IMA); and state-of-the-art solid state power amplifier products. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | B. Summary of Significant Accounting Policies Basis of Presentation The Condensed Combined Financial Statements include the accounts of the Company and all of its majority-owned subsidiaries. Intercompany transactions and accounts have been eliminated. The Condensed Combined Financial Statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Condensed Combined Financial Statements have been derived from the consolidated financial statements and accounting records of LGL Group on a carve-out basis. These Condensed Combined Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during the periods presented. Transactions between the Company and LGL Group have been included in these Condensed Combined Financial Statements. For those transactions between the Company and LGL Group that have been historically settled in cash, the Company has reflected such balances in the Condensed Combined Balance Sheets as Due from Related Party. The aggregate net effect of transactions between the Company and related parties that have been historically settled other than in cash are reflected in the Condensed Combined Balance Sheets as Net Investment by LGL Group, Inc. and in the Condensed Combined Statements of Cash Flows as Net Transfers from (to) LGL Group, Inc. For additional information, see Note C – Related Party Transactions. The Condensed Combined Balance Sheets include certain LGL Group assets and liabilities that are specifically identifiable or otherwise attributable to the Company. The debt and associated interest expense in these Condensed Combined Financial Statements relate to third-party borrowings under a revolving credit agreement specifically attributable to legal obligations of the Company. The Cash and Cash Equivalents held by LGL Group at the corporate level are not specifically identifiable to the Company and, therefore, have not been reflected in the Company’s Condensed Combined Balance Sheets. Cash and Cash Equivalents in the Condensed Combined Balance Sheets represent Cash and Cash Equivalents held by the Company at the respective period-ends. The Condensed Combined Statements of Operations include an allocation for certain corporate and shared service functions historically provided by LGL Group, including, but not limited to, executive oversight, accounting, tax, and other shared services. These expenses have been allocated to us on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis of consolidated sales or other measures considered to be a reasonable reflection of the historical utilization levels of these services. Management believes the assumptions underlying our Condensed Combined Financial Statements , including the assumptions regarding the allocation of general corporate expenses from LGL Group , are reasonable. Nevertheless, our Condensed Combined Financial Statements may not include all of the actual expenses that would have been incurred and may not reflect our results of operations, financial position and cash flows , had we operated as a standalone company during the periods presented. Actual costs that would have been incurred if we had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. Going forward, the Company may perform these functions using its own resources or outsourced services. For a period following the Separation, some of these functions may continue to be provided by LGL Group under a transition services agreement, and the Company may provide some services to LGL Group under the transition services agreement. We also may incur additional costs associated with being a standalone, publicly listed company that were not included in the expense allocations and, therefore, would result in additional costs that are not reflected in our historical results of operations, financial position and cash flows. During the periods presented in these condensed combined financial statements, the Company’s income tax expense and deferred tax balances have been included in the LGL Group’ income tax returns. Income tax expense and deferred tax balances contained in the condensed combined financial statements are presented on a separate return basis, as if the Company had filed its own income tax returns. The taxes recorded in the condensed combined statements of operations are not necessarily representative of the taxes that may arise in the future when the Company files its income tax returns independent from LGL Group’s income tax returns. Earnings per Share Earnings per share was calculated based on the 2,676,469 shares of the Company's common stock distributed to LGL Group stockholders on October 7, 2022. The same number of shares is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation. Interim Financial Statements The condensed combined financial statements as of and for the three and nine months ended September 30, 2022 and 2021 are unaudited. These condensed combined financial statements should be read in conjunction with the audited Condensed Combined Financial Statements and Notes thereto for the fiscal years ended December 31, 2021 and 2020, contained within the Information Statement filed with Amendment No. 4 to our Registration Statement on Form 10, filed with the Securities and Exchange Commission (the “SEC”) on August 19, 2022. In the opinion of management, the accompanying condensed combined financial statements reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods. Use of Estimates The preparation of the Condensed Combined Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Research and Development Costs Research and development costs are charged to operations as incurred. Such costs were approximately $1,505,000 and $1,527,000 for the nine months ended September 30, 2022 and 2021, respectively, and are included within engineering, selling and administrative expenses. Revenue Recognition The Company recognizes revenue from the sale of its products in accordance with the criteria in Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. The Company meets these conditions upon the Company’s satisfaction of the performance obligation, usually at the time of shipment to the customer, because control passes to the customer at that time. Our standard terms for customers are net due within 30 days, with a few exceptions, none regularly exceeding 60 days. The Company provides disaggregated revenue details by geographic markets in Note H – Domestic and Foreign Revenues. The Company offers a limited right of return and/or authorized price protection provisions in its agreements with certain electronic component distributors who resell the Company's products to original equipment manufacturers or electronic manufacturing services companies. As a result, the Company estimates and records a reserve for future returns and other charges against revenue at the time of shipment consistent with the terms of sale. The reserve is estimated based on historical experience with each respective distributor. These reserves and charges are immaterial as the Company does not have a history of significant price protection adjustments or returns. The Company provides a standard assurance warranty that does not create a performance obligation. Practical Expedients: - The Company applies the practical expedient for shipping and handling as fulfillment costs. - The Company expenses sales commissions as sales and marketing expenses in the period they are incurred. Concentration Risks For the nine months ended September 30, 2022, the Company's largest customer, a commercial aerospace and defense company, accounted for $6,361,000, or 27.5%, of the Company's total revenues, compared to $5,597,000, or 28.2%, of the Company’s total revenues for the nine months ended September 30, 2021. The Company’s second largest customer, a defense contractor, accounted for $3,510,000, or 14.4%, of the Company's total revenues, compared to $2,558,000, or 12.9%, of the Company’s total revenues for the nine months ended September 30, 2022 and 2021, respectively. A significant portion of the Company's accounts receivable is concentrated with a relatively small number of customers. As of September 30, 2022, four of the Company's largest customers accounted for approximately $3,578,000, or 67.1%, of accounts receivable. The Company carefully evaluates the creditworthiness of its customers in deciding to extend credit and utilizes letters of credit to further limit credit risk for export sales. As a result of these policies, the Company has experienced very low historical bad debt expense and believes the related risk to be minimal. Segment Information ASC 280, Segment Information Impairments of Long-Lived Assets Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Long-lived assets are grouped with other assets to the lowest level to which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Management assesses the recoverability of the carrying cost of the assets based on a review of projected undiscounted cash flows. If an asset is held for sale, management reviews its estimated fair value less cost to sell. Fair value is determined using pertinent market information, including appraisals or broker's estimates, and/or projected discounted cash flows. In the event an impairment loss is identified, it is recognized based on the amount by which the carrying value exceeds the estimated fair value of the long-lived asset. We performed an assessment to determine if there were any indicators of impairment as a result of the operating conditions resulting from the coronavirus (“COVID-19”) pandemic at the end of the fiscal quarter ended September 30, 2022. We concluded that, while there were events and circumstances in the macro-environment that did impact us, we did not experience any entity-specific indicators of asset impairment and no triggering events occurred. Net Investment by LGL Group, Inc. Net investment by LGL Group, Inc. in the Condensed Combined Balance Sheets is presented in lieu of stockholders’ equity and represents LGL Group’s historical investment in the Company, the accumulated net earnings after taxes and the net effect of the transactions with and allocations from LGL Group. All transactions reflected in Net Investment by LGL Group, Inc. in the accompanying Condensed Combined Balance Sheets have been considered as financing activities for purposes of the Condensed Combined Statements of Cash Flows. For additional information, see Basis of Presentation above and Note C – Related Party Transactions below. Recently Issued Accounting Pronouncements In Jun e 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-13, “ Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments ,” which changes the impairment model for most financial assets. The standard replaces the incurred loss model with the current expected credit loss (“CECL”) model to estimate credit losses for financial assets. The provisions of the standard are effective for the Company on January 1, 2023; early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its financial statements. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | C . Related Party Transactions Allocation of General Corporate Expenses For purposes of preparing these Condensed Combined Financial Statements on a “carve-out” basis, we have allocated a portion of LGL Group’s corporate expenses, totaling $277,000 and $929,000 to the Company for the three and nine months ended September 30, 2022, respectively, and $184,000 and $569,000 to the Company for the three and nine months ended September 30, 2021, respectively, which are recorded within engineering, selling and administrative expenses. See Note B – Summary of Significant Accounting Policies for a discussion of the methodology used to allocate corporate-related costs for purposes of preparing these financial statements on a “carve-out” basis. Due to and from Related Parties Balances between the Company and LGL Group that are derived from transactions that have been historically settled in cash are reflected in the Condensed Combined Balance Sheets as Due from Related Party. Balances between the Company and LGL Group or its affiliates derived from transactions that have been historically settled other than in cash are included in Net Investment by LGL Group, Inc. within Equity on the Condensed Combined Balance Sheets. Net Transfers to LGL Group, Inc. The following table presents the components of Net Transfers to LGL Group, Inc. in the Condensed Combined Statements of Equity (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Corporate Expense Allocations $ 83 $ (22 ) $ 145 $ (22 ) Share-based Compensation Expense 75 17 362 106 Total Net Transfers to LGL Group, Inc. $ 158 $ (5 ) $ 507 $ 84 |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Inventories | D. Inventories Inventories are valued at the lower of cost or net realizable value using the FIFO (first-in, first-out) method. The Company reduces the value of its inventories to net realizable value when the net realizable value is believed to be less than the cost of the item. The inventory reserve for excess and obsolete inventory as of September 30, 2022, December 31, 2021 and September 30, 2021 was $1,621,000, $1,381,000 and $1,347,000, respectively. Inventories are comprised of the following (in thousands): September 30, 2022 December 31, 2021 September 30, 2021 (unaudited) (unaudited) Raw materials $ 3,392 $ 2,061 $ 1,745 Work in process 2,721 2,190 2,471 Finished goods 1,185 970 791 Total Inventories, net $ 7,298 $ 5,221 $ 5,007 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | E . Income Taxes The Company’s quarterly provision for income taxes is measured using an annual effective tax rate, adjusted for discrete items within the period presented. To determine the annual effective tax rate, the Company estimates both the total income (loss) before income taxes for the full year and the jurisdictions in which that income (loss) is subject to tax. The actual effective tax rate for the full year may differ from these estimates if income (loss) before income taxes is greater than or less than what was estimated or if the allocation of income (loss) to jurisdictions in which it is taxed is different from the estimated allocations. The effective tax rate for the three months ended September 30, 2022 and 2021 was 20.9% and 17.4%, respectively. The effective tax rate for the nine months ended September 30, 2022 and September 30, 2021 was 19.6% and 19.3%, respectively. Differences between the Company’s effective income tax rate and the U.S. federal statutory rate are primarily the impact of research and development credits, the mix of earnings between jurisdictions, and state taxes . |
Revolving Credit Agreement
Revolving Credit Agreement | 9 Months Ended |
Sep. 30, 2022 | |
Line Of Credit Facility [Abstract] | |
Revolving Credit Agreement | F . Revolving Credit Agreement On May 12, 2022, the loan agreement for a revolving line of credit with Synovus Bank matured. At September 30, 2022 and December 31, 2021, there were no outstanding borrowings under the revolving line of credit with Synovus Bank. On June 15, 2022, MtronPTI entered into a loan agreement (the “Loan Agreement”) for a revolving line of credit with Fifth Third Bank, National Association (“Fifth Third Bank”), for up to $5,000,000 bearing interest at the Secured Overnight Financing Rate (“SOFR”) plus a margin of 2.25%. The Loan Agreement has a maturity date of June 15, 2025 and contains various affirmative and negative covenants that are customary for lines of credit and transactions of this type, including limitations on the incurrence of debt and liabilities, as well as financial reporting requirements. The Loan Agreement also imposes certain financial covenants based on Debt Service Coverage Ratio, Current Ratio, and the Ratio of Total Liabilities to Total Net Worth (as such terms are defined in the Loan Agreement). All loans pursuant to the Loan Agreement will be secured by a continuing and unconditional first priority security interest in and to any and all property of the Company. At September 30, 2022, there were no outstanding borrowings under the revolving line of credit with Fifth Third Bank. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | G. Commitments and Contingencies In the ordinary course of business, the Company and its subsidiaries may become defendants in certain product liability, patent infringement, worker claims and other litigation. The Company records a liability when it is probable that a loss has been incurred and the amount is reasonably estimable. The Company has no legal accrual for contingencies as of September 30, 2022. |
Domestic and Foreign Revenues
Domestic and Foreign Revenues | 9 Months Ended |
Sep. 30, 2022 | |
Revenues [Abstract] | |
Domestic and Foreign Revenues | H . Domestic and Foreign Revenues Significant foreign revenues from operations (10% or more of foreign sales) follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Malaysia $ 1,332 $ 832 $ 3,856 $ 1,874 Hong Kong 103 140 479 495 Hungary 236 1 247 7 All other foreign countries 532 459 1,580 1,682 Total foreign revenues $ 2,203 $ 1,432 $ 6,162 $ 4,058 Total domestic revenues $ 6,214 $ 5,741 $ 17,010 $ 15,776 The Company allocates its foreign revenue based on the customer's ship-to location. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | I. M-tron Industries, Inc. Separation On October 7, 2022, the Separation was completed through LGL Group’s distribution of 100% of the shares of the Company’s common stock to holders of LGL Group's common stock as of the close of business on September 30, 2022, the record date for the Distribution. As a result of the Distribution, LGL Group's stockholders of record received one-half share of the Company's common stock for every share of LGL Group common stock held by them. On October 7, 2022, the Company became an independent, publicly traded company trading on the NYSE American under the stock symbol "MPTI." LGL Group retained no ownership interest in the Company as of the completion of the Separation. In connection with the Separation, the Company wrote off $4,439,000 of intercompany receivables due from LGL Group, which brought intercompany balances to zero, and also made a cash payment of approximately $6,000 to LGL on October 7, 2022, bringing the Company’s cash balance to $1,000,000 as of the date of the Separation. The Company issued 50,329 restricted shares of common stock to MtronPTI management as replacement awards for their unvested restricted shares of common stock of LGL Group, keeping the original vesting and other existing terms for each grant. The Company also issued a grant of options to purchase 9,710 shares of common stock at a strike price of $13.10 per share to a member of MtronPTI management as a replacement award for an unvested option award of LGL Group, keeping the original vesting and other existing terms for the grant. |
Summary of Significant Accoun_2
Summary of Significant Accounting Polices (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The Condensed Combined Financial Statements include the accounts of the Company and all of its majority-owned subsidiaries. Intercompany transactions and accounts have been eliminated. The Condensed Combined Financial Statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The Condensed Combined Financial Statements have been derived from the consolidated financial statements and accounting records of LGL Group on a carve-out basis. These Condensed Combined Financial Statements may not be indicative of the Company’s future performance and do not necessarily reflect what the financial position, results of operations, and cash flows would have been had it operated as an independent company during the periods presented. Transactions between the Company and LGL Group have been included in these Condensed Combined Financial Statements. For those transactions between the Company and LGL Group that have been historically settled in cash, the Company has reflected such balances in the Condensed Combined Balance Sheets as Due from Related Party. The aggregate net effect of transactions between the Company and related parties that have been historically settled other than in cash are reflected in the Condensed Combined Balance Sheets as Net Investment by LGL Group, Inc. and in the Condensed Combined Statements of Cash Flows as Net Transfers from (to) LGL Group, Inc. For additional information, see Note C – Related Party Transactions. The Condensed Combined Balance Sheets include certain LGL Group assets and liabilities that are specifically identifiable or otherwise attributable to the Company. The debt and associated interest expense in these Condensed Combined Financial Statements relate to third-party borrowings under a revolving credit agreement specifically attributable to legal obligations of the Company. The Cash and Cash Equivalents held by LGL Group at the corporate level are not specifically identifiable to the Company and, therefore, have not been reflected in the Company’s Condensed Combined Balance Sheets. Cash and Cash Equivalents in the Condensed Combined Balance Sheets represent Cash and Cash Equivalents held by the Company at the respective period-ends. The Condensed Combined Statements of Operations include an allocation for certain corporate and shared service functions historically provided by LGL Group, including, but not limited to, executive oversight, accounting, tax, and other shared services. These expenses have been allocated to us on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis of consolidated sales or other measures considered to be a reasonable reflection of the historical utilization levels of these services. Management believes the assumptions underlying our Condensed Combined Financial Statements , including the assumptions regarding the allocation of general corporate expenses from LGL Group , are reasonable. Nevertheless, our Condensed Combined Financial Statements may not include all of the actual expenses that would have been incurred and may not reflect our results of operations, financial position and cash flows , had we operated as a standalone company during the periods presented. Actual costs that would have been incurred if we had operated as a standalone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. Going forward, the Company may perform these functions using its own resources or outsourced services. For a period following the Separation, some of these functions may continue to be provided by LGL Group under a transition services agreement, and the Company may provide some services to LGL Group under the transition services agreement. We also may incur additional costs associated with being a standalone, publicly listed company that were not included in the expense allocations and, therefore, would result in additional costs that are not reflected in our historical results of operations, financial position and cash flows. During the periods presented in these condensed combined financial statements, the Company’s income tax expense and deferred tax balances have been included in the LGL Group’ income tax returns. Income tax expense and deferred tax balances contained in the condensed combined financial statements are presented on a separate return basis, as if the Company had filed its own income tax returns. The taxes recorded in the condensed combined statements of operations are not necessarily representative of the taxes that may arise in the future when the Company files its income tax returns independent from LGL Group’s income tax returns. |
Earnings per Share | Earnings per Share Earnings per share was calculated based on the 2,676,469 shares of the Company's common stock distributed to LGL Group stockholders on October 7, 2022. The same number of shares is being utilized for the calculation of basic and diluted earnings per share for all periods presented prior to the Separation. |
Interim Financial Statements | Interim Financial Statements The condensed combined financial statements as of and for the three and nine months ended September 30, 2022 and 2021 are unaudited. These condensed combined financial statements should be read in conjunction with the audited Condensed Combined Financial Statements and Notes thereto for the fiscal years ended December 31, 2021 and 2020, contained within the Information Statement filed with Amendment No. 4 to our Registration Statement on Form 10, filed with the Securities and Exchange Commission (the “SEC”) on August 19, 2022. In the opinion of management, the accompanying condensed combined financial statements reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of the results for the interim periods. |
Use of Estimates | Use of Estimates The preparation of the Condensed Combined Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Research and Development Costs | Research and Development Costs Research and development costs are charged to operations as incurred. Such costs were approximately $1,505,000 and $1,527,000 for the nine months ended September 30, 2022 and 2021, respectively, and are included within engineering, selling and administrative expenses. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue from the sale of its products in accordance with the criteria in Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers Step 1: Identify the contract(s) with a customer. Step 2: Identify the performance obligations in the contract. Step 3: Determine the transaction price. Step 4: Allocate the transaction price to the performance obligations in the contract. Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation. The Company meets these conditions upon the Company’s satisfaction of the performance obligation, usually at the time of shipment to the customer, because control passes to the customer at that time. Our standard terms for customers are net due within 30 days, with a few exceptions, none regularly exceeding 60 days. The Company provides disaggregated revenue details by geographic markets in Note H – Domestic and Foreign Revenues. The Company offers a limited right of return and/or authorized price protection provisions in its agreements with certain electronic component distributors who resell the Company's products to original equipment manufacturers or electronic manufacturing services companies. As a result, the Company estimates and records a reserve for future returns and other charges against revenue at the time of shipment consistent with the terms of sale. The reserve is estimated based on historical experience with each respective distributor. These reserves and charges are immaterial as the Company does not have a history of significant price protection adjustments or returns. The Company provides a standard assurance warranty that does not create a performance obligation. Practical Expedients: - The Company applies the practical expedient for shipping and handling as fulfillment costs. - The Company expenses sales commissions as sales and marketing expenses in the period they are incurred. |
Concentration Risks | Concentration Risks For the nine months ended September 30, 2022, the Company's largest customer, a commercial aerospace and defense company, accounted for $6,361,000, or 27.5%, of the Company's total revenues, compared to $5,597,000, or 28.2%, of the Company’s total revenues for the nine months ended September 30, 2021. The Company’s second largest customer, a defense contractor, accounted for $3,510,000, or 14.4%, of the Company's total revenues, compared to $2,558,000, or 12.9%, of the Company’s total revenues for the nine months ended September 30, 2022 and 2021, respectively. A significant portion of the Company's accounts receivable is concentrated with a relatively small number of customers. As of September 30, 2022, four of the Company's largest customers accounted for approximately $3,578,000, or 67.1%, of accounts receivable. The Company carefully evaluates the creditworthiness of its customers in deciding to extend credit and utilizes letters of credit to further limit credit risk for export sales. As a result of these policies, the Company has experienced very low historical bad debt expense and believes the related risk to be minimal. |
Segment Information | Segment Information ASC 280, Segment Information |
Impairments of Long-Lived Assets | Impairments of Long-Lived Assets Long-lived assets, including intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Long-lived assets are grouped with other assets to the lowest level to which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. Management assesses the recoverability of the carrying cost of the assets based on a review of projected undiscounted cash flows. If an asset is held for sale, management reviews its estimated fair value less cost to sell. Fair value is determined using pertinent market information, including appraisals or broker's estimates, and/or projected discounted cash flows. In the event an impairment loss is identified, it is recognized based on the amount by which the carrying value exceeds the estimated fair value of the long-lived asset. We performed an assessment to determine if there were any indicators of impairment as a result of the operating conditions resulting from the coronavirus (“COVID-19”) pandemic at the end of the fiscal quarter ended September 30, 2022. We concluded that, while there were events and circumstances in the macro-environment that did impact us, we did not experience any entity-specific indicators of asset impairment and no triggering events occurred. |
Net Investment by LGL Group, Inc. | Net Investment by LGL Group, Inc. Net investment by LGL Group, Inc. in the Condensed Combined Balance Sheets is presented in lieu of stockholders’ equity and represents LGL Group’s historical investment in the Company, the accumulated net earnings after taxes and the net effect of the transactions with and allocations from LGL Group. All transactions reflected in Net Investment by LGL Group, Inc. in the accompanying Condensed Combined Balance Sheets have been considered as financing activities for purposes of the Condensed Combined Statements of Cash Flows. For additional information, see Basis of Presentation above and Note C – Related Party Transactions below. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In Jun e 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-13, “ Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments ,” which changes the impairment model for most financial assets. The standard replaces the incurred loss model with the current expected credit loss (“CECL”) model to estimate credit losses for financial assets. The provisions of the standard are effective for the Company on January 1, 2023; early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its financial statements. |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
LGL Group, Inc. | |
Related Party Transaction [Line Items] | |
Components of Net Transfers | The following table presents the components of Net Transfers to LGL Group, Inc. in the Condensed Combined Statements of Equity (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Corporate Expense Allocations $ 83 $ (22 ) $ 145 $ (22 ) Share-based Compensation Expense 75 17 362 106 Total Net Transfers to LGL Group, Inc. $ 158 $ (5 ) $ 507 $ 84 |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Inventory Disclosure [Abstract] | |
Schedule of Components of Inventory | Inventories are comprised of the following (in thousands): September 30, 2022 December 31, 2021 September 30, 2021 (unaudited) (unaudited) Raw materials $ 3,392 $ 2,061 $ 1,745 Work in process 2,721 2,190 2,471 Finished goods 1,185 970 791 Total Inventories, net $ 7,298 $ 5,221 $ 5,007 |
Domestic and Foreign Revenues (
Domestic and Foreign Revenues (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenues [Abstract] | |
Significant Foreign Revenues from Operations | Significant foreign revenues from operations (10% or more of foreign sales) follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Malaysia $ 1,332 $ 832 $ 3,856 $ 1,874 Hong Kong 103 140 479 495 Hungary 236 1 247 7 All other foreign countries 532 459 1,580 1,682 Total foreign revenues $ 2,203 $ 1,432 $ 6,162 $ 4,058 Total domestic revenues $ 6,214 $ 5,741 $ 17,010 $ 15,776 The Company allocates its foreign revenue based on the customer's ship-to location. |
Background and Description of_2
Background and Description of Business - Additional Information (Details) | 9 Months Ended | ||
Oct. 07, 2022 USD ($) | Sep. 30, 2022 Subsidiary | Sep. 30, 2022 | |
Background And Description Of Business [Line Items] | |||
Number of Subsidiaries | Subsidiary | 2 | ||
LGL Group, Inc. | |||
Background And Description Of Business [Line Items] | |||
Conversion of stock description | one-half share of the Company's common stock for every share of LGL Group's common stock held by them. | ||
Subsequent Event | LGL Group, Inc. | |||
Background And Description Of Business [Line Items] | |||
Percentage of distribution of common shares to former parents stockholders | 100% | ||
Distribution made to former stockholders date of record | Sep. 30, 2022 | ||
Intercompany receivables due from former parent write off | $ 4,439,000 | ||
Cash payment to former parent | 6,000,000 | ||
Intercompany receivables | $ 0 | ||
Ownership interest | 0% | ||
Cash | $ 1,000,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Polices - Additional Information (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of shares used for computation of earnings per share | 2,676,469 | 2,676,469 | ||
Research and development costs charged to operations | $ 1,505,000 | $ 1,527,000 | ||
REVENUES | $ 8,417,000 | $ 7,173,000 | 23,172,000 | 19,834,000 |
Accounts receivable | $ 3,578,000,000 | 3,578,000,000 | ||
Revenues | Customer Concentration Risk | Commercial Aerospace and Defense Company | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
REVENUES | $ 6,361,000 | $ 5,597,000 | ||
Concentration risk, percentage | 27.50% | 28.20% | ||
Revenues | Customer Concentration Risk | Defense Contractor | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
REVENUES | $ 3,510,000 | $ 2,558,000 | ||
Concentration risk, percentage | 14.40% | 12.90% | ||
Accounts Receivable | Customer Concentration Risk | Four Largest Customer | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration risk, percentage | 67.10% | |||
ASU 2014-09 | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Revenue, performance obligation, description of timing | The Company meets these conditions upon the Company’s satisfaction of the performance obligation, usually at the time of shipment to the customer, because control passes to the customer at that time. Our standard terms for customers are net due within 30 days, with a few exceptions, none regularly exceeding 60 days. | |||
ASU 2014-09 | Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Customer due days | 30 days | |||
ASU 2014-09 | Maximum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Customer due days | 60 days |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
LGL Group, Inc. | ||||
Related Party Transaction [Line Items] | ||||
Allocated corporate expenses | $ 277,000 | $ 184,000 | $ 929,000 | $ 569,000 |
Related Party Transactions - Co
Related Party Transactions - Components of Net Transfers (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Related Party Transaction [Line Items] | ||||||||
Total Net Transfers to LGL Group, Inc. | $ 145 | $ (22) | ||||||
LGL Group, Inc. | ||||||||
Related Party Transaction [Line Items] | ||||||||
Corporate Expense Allocations | $ 83 | $ (22) | 145 | (22) | ||||
Share-based Compensation Expense | 75 | 17 | 362 | 106 | ||||
Total Net Transfers to LGL Group, Inc. | $ 158 | $ 109 | $ 240 | $ (5) | $ 42 | $ 47 | $ 507 | $ 84 |
Inventories - Additional Inform
Inventories - Additional Information (Details) - USD ($) | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 |
Inventory Disclosure [Abstract] | |||
Reserve for excess and obsolete inventory | $ 1,621,000 | $ 1,381,000 | $ 1,347,000 |
Inventories - Schedule of Inven
Inventories - Schedule of Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 |
Classification of Inventories [Abstract] | |||
Raw materials | $ 3,392 | $ 2,061 | $ 1,745 |
Work in process | 2,721 | 2,190 | 2,471 |
Finished goods | 1,185 | 970 | 791 |
Total Inventories, net | $ 7,298 | $ 5,221 | $ 5,007 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | 20.90% | 17.40% | 19.60% | 19.30% |
Revolving Credit Agreement - Ad
Revolving Credit Agreement - Additional Information (Details) - Revolving Credit Facility - USD ($) | 9 Months Ended | ||
Jun. 15, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Synovus Bank | |||
Line Of Credit Facility [Line Items] | |||
Notes outstanding borrowings amount | $ 0 | $ 0 | |
Fifth Third Bank | |||
Line Of Credit Facility [Line Items] | |||
Notes outstanding borrowings amount | $ 0 | ||
Revolving line of credit , borrowing limit | $ 5,000,000 | ||
Promissory note maturity date | Jun. 15, 2025 | ||
Fifth Third Bank | Secured Overnight Financing Rate (“SOFR”) | |||
Line Of Credit Facility [Line Items] | |||
Description of variable rate | Secured Overnight Financing Rate (“SOFR”) plus a margin of 2.25%. | ||
Interest rate | 2.25% |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Details) | Sep. 30, 2022 USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
Legal accrual for contingencies | $ 0 |
Domestic and Foreign Revenues -
Domestic and Foreign Revenues - Additional Information (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Foreign | Sales Revenue, Segment | Customer Concentration Risk | |
Entity Wide Revenue Major Customer [Line Items] | |
Portion of foreign sales | 10% |
Domestic and Foreign Revenues_2
Domestic and Foreign Revenues - Significant Foreign Revenues from Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Entity Wide Revenue Major Customer [Line Items] | ||||
Revenues from operations | $ 8,417 | $ 7,173 | $ 23,172 | $ 19,834 |
Malaysia | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Revenues from operations | 1,332 | 832 | 3,856 | 1,874 |
Hong Kong | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Revenues from operations | 103 | 140 | 479 | 495 |
Hungary | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Revenues from operations | 236 | 1 | 247 | 7 |
All other foreign countries | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Revenues from operations | 532 | 459 | 1,580 | 1,682 |
Foreign | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Revenues from operations | 2,203 | 1,432 | 6,162 | 4,058 |
Domestic | ||||
Entity Wide Revenue Major Customer [Line Items] | ||||
Revenues from operations | $ 6,214 | $ 5,741 | $ 17,010 | $ 15,776 |
Subsequent Events - Additional
Subsequent Events - Additional Information (Details) - USD ($) | 9 Months Ended | |
Oct. 07, 2022 | Sep. 30, 2022 | |
Subsequent Event | LGL Group, Inc. | ||
Subsequent Event [Line Items] | ||
Intercompany receivables due from former parent write off | $ 4,439,000 | |
Intercompany receivables | 0 | |
Cash payment to former parent | 6,000,000 | |
Cash | $ 1,000,000 | |
Number of restricted shares of common stock issued | 50,329 | |
Number of stock options granted | 9,710 | |
Strike price | $ 13.10 | |
LGL Group, Inc. | ||
Subsequent Event [Line Items] | ||
Conversion of stock description | one-half share of the Company's common stock for every share of LGL Group's common stock held by them. | |
LGL Group, Inc. | Subsequent Event | ||
Subsequent Event [Line Items] | ||
Percentage of distribution of common shares to former parents stockholders | 100% | |
Ownership interest | 0% | |
Distribution made to former stockholders date of record | Sep. 30, 2022 | |
Intercompany receivables due from former parent write off | $ 4,439,000 | |
Intercompany receivables | 0 | |
Cash payment to former parent | 6,000,000 | |
Cash | $ 1,000,000 |