TRANS-LUX CORPORATION Overview
Trans-Lux is a leading supplier of LED technology for display applications. The essential elements of these systems are the real-time, programmable digital products that we design, manufacture, distribute and service. Designed to meet the digital signage solutions for any size venue's indoor and outdoor needs, these displays are used primarily in applications for the financial, banking, gaming, corporate, advertising, transportation, entertainment and sports markets. The Company operates in two reportable segments: Digital product sales and Digital product lease and maintenance.
The Digital product sales segment includes worldwide revenues and related expenses from the sales of both indoor and outdoor digital product signage. This segment includes the financial, government/private, gaming, scoreboards and outdoor advertising markets. The Digital product lease and maintenance segment includes worldwide revenues and related expenses from the lease and maintenance of both indoor and outdoor digital product signage. This segment includes the lease and maintenance of digital product signage across all markets.
Critical Accounting Estimates
There have been no changes to the Company's critical accounting estimates as previously reported in the Company's 2021 Form 10-K.
Results of Operations
Nine Months Ended
The following table presents our Statements of Operations data, expressed as a
percentage of revenue for the nine months ended
Nine months ended September 30
In thousands, except percentages 2022 2021
Revenues:
Digital product sales$ 14,763 93.7 %$ 6,882 82.5 % Digital product lease and maintenance 993 6.3 % 1,456 17.5 % Total revenues 15,756 100.0 % 8,338 100.0 % Cost of revenues: Cost of digital product sales 13,122 83.3 % 8,286 99.3 %
Cost of digital product lease and maintenance 431 2.7 % 462 5.6 % Total cost of revenues
13,553 86.0 % 8,748 104.9 %
Gross income (loss) 2,203 14.0 % (410) (4.9) %
General and administrative expenses (2,468) (15.7) % (2,270) (27.2) %
Operating loss (265) (1.7) % (2,680) (32.1) %
Interest expense, net (382) (2.4) % (363) (4.4) %
Gain (loss) on foreign currency remeasurement 241 1.5 % (10) (0.1) % Gain on extinguishment of debt
- - % 77 0.9 %
Gain on forgiveness of PPP loan 824 5.3 % - - %
Pension benefit 158 1.0 % 200 2.4 %
Income (loss) before income taxes 576 3.7 % (2,776) (33.3) %
Income tax expense (19) (0.2) % (19) (0.2) %
Net income (loss) $ 557 3.5 % $ (2,795) (33.5) %
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Total revenues for the nine months ended
Digital product sales revenues increased
Digital product lease and maintenance revenues decreased
The financial services market continues to be negatively impacted by the current investment climate resulting in consolidation within that industry and the wider use of flat-panel screens for smaller applications.
Total operating loss for the nine months ended
Digital product sales operating income (loss) increased
Digital product lease and maintenance operating income decreased
Corporate general and administrative expenses increased
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Net interest expense increased
The effective tax rate for the nine months ended
Three Months Ended
The following table presents our Statements of Operations data, expressed as a
percentage of revenue for the three months ended
Three months ended September 30
In thousands, except percentages 2022 2021
Revenues:
Digital product sales$ 4,510 94.2 %$ 2,393 83.5 % Digital product lease and maintenance 279 5.8 % 472 16.5 % Total revenues 4,789 100.0 % 2,865 100.0 % Cost of revenues: Cost of digital product sales 4,364 91.1 % 3,010 105.0 % Cost of digital product lease and maintenance 124 2.6 % 145 5.1 % Total cost of revenues 4,488 93.7 % 3,155 110.1 % Gross income (loss) 301 6.3 % (290) (10.1) % General and administrative expenses (884) (18.5) % (727) (25.4) % Operating loss (583) (12.2) % (1,017) (35.5) % Interest expense, net (110) (2.3) % (103) (3.6) % Income on foreign currency remeasurement 181 3.8 % 62 2.2 % Pension benefit 53 1.1 % 66 2.3 % Loss before income taxes (459) (9.6) % (992) (34.6) % Income tax expense (7) (0.1) % (7) (0.3) % Net loss$ (466) (9.7) %$ (999) (34.9) %
Total revenues for the three months ended
Digital product sales revenues increased
Digital product lease and maintenance revenues decreased
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Total operating loss for the three months ended
Digital product sales operating loss decreased
Digital product lease and maintenance operating income decreased
The cost of Digital product lease and maintenance decreased
Corporate general and administrative expenses increased
Net interest expense increased
The effective tax rate for the three months ended
Liquidity and Capital Resources
Current Liquidity
The Company has incurred significant recurring losses and continues to have a
significant working capital deficiency. As described below, as of
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The Company recorded income of
The Company is dependent on future operating performance in order to generate sufficient cash flows in order to continue to run its businesses. Future operating performance is dependent on general economic conditions, as well as financial, competitive and other factors beyond our control, including the impact of the current economic environment, the spread of major epidemics (including coronavirus) and other related uncertainties such as government imposed travel restrictions, interruptions to supply chains, extended shut down of businesses and the impact of inflation. In order to more effectively manage its cash resources, the Company had, from time to time, increased the timetable of its payment of some of its payables, which delayed certain product deliveries from our vendors, which in turn delayed certain deliveries to our customers.
There is substantial doubt as to whether we will have adequate liquidity, including access to the debt and equity capital markets, to operate our business over the next 12 months from the date of issuance of this Form 10-Q. To address the Company's cash shortfall, the Company is exploring various financing alternatives, of which there can be no assurance that the Company will be able to obtain financing. Failure to obtain financing will jeopardize the Company's ability to continue as a going concern. The Company continually evaluates the need and availability of long-term capital in order to meet its cash requirements and fund potential new opportunities.
The Company used cash of
Cash and cash equivalents decreased
Under various agreements, the Company is obligated to make future cash payments in fixed amounts. These include payments under the Company's current and long-term debt agreements, pension plan minimum required contributions, employment agreement payments and rent payments required under operating lease agreements. The Company has both variable and fixed interest rate debt.
Interest payments are projected based on actual interest payments incurred in 2022 until the underlying debts mature. As interest rates have increased in 2022, and may continue to increase, the amounts the Company pays for interest could exceed the projected amounts.
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The following table summarizes the Company's fixed cash obligations as of
Remainder of
In thousands 2022 2023 2024 2025 2026
Long-term debt, including interest
- - 179 129 60
Estimated warranty liability 138 113 91 63 49
Operating lease payments 123 438 146 149 152
Total $ 5,194 $ 551 $ 447 $ 372 $ 292 As of
The Company may still seek additional financing in order to provide enough cash to cover our remaining current fixed cash obligations as well as providing working capital. However, there can be no assurance as to the amounts, if any, the Company will receive in any such financing or the terms thereof. The Company has no agreements, commitments or understandings with respect to any such financings. To the extent the Company issues additional equity securities, it could be dilutive to existing shareholders.
For a further description of the Company's long-term debt, see Note 7 to the Condensed Consolidated Financial Statements - Long-Term Debt.
Pension Plan Contributions
The minimum required pension plan contribution for 2022 is expected to be
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
The Company may, from time to time, provide estimates as to future performance. These forward-looking statements will be estimates and may or may not be realized by the Company. The Company undertakes no duty to update such forward-looking statements. Many factors could cause actual results to differ from these forward-looking statements, including loss of market share through competition, introduction of competing products by others, pressure on prices from competition or purchasers of the Company's products, interest rate and foreign exchange fluctuations, the impact of inflation, terrorist acts and war.
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