Name: TRANS LUX Corp Q2 2016 Earnings Call
Start: 2016-08-12T00:00:00.000Z

Executive Summary

Q2 2016 revenue was $5.774M, down 4.5% year over year, but Trans-Lux posted positive net income of $0.082M ($0.02 EPS) and EBITDA of $0.490M, driven by improved gross margins and lower operating expenses .
Gross margin expanded to 27.0% vs 23.0% in Q2 2015 and 22.8% in Q1 2016, reflecting product mix and cost control; operating income improved to $0.031M from a loss in the prior year’s quarter .
Liquidity milestones: PBGC released its lien after additional contributions, and the company entered a new credit facility up to $4.0M (revolver up to $3.0M, term loan $1.0M) at prime+4–6%, enhancing working capital and enabling equipment purchases .
Debt reduction: tender purchased $0.353M in defaulted Notes/Debentures at $0.20 on the dollar, lowering outstanding balances and accrued interest; management emphasized this supports continued growth .
No Wall Street consensus estimates available via S&P Global for Q2 2016; results should be assessed on absolute performance and margin trajectory given lack of coverage.

What Went Well and What Went Wrong

What Went Well
- Positive net income and stronger EBITDA versus prior year on improved gross margins and lower operating expenses; “These improvements to operating results, working capital liquidity and our financial statements position us well for continued growth,” said CEO J.M. Allain .
- Gross margin expanded to 27.0%; digital product sales operating income rose to $0.608M in Q2 2016 vs $0.120M in Q2 2015, reflecting cost reductions and mix .
- PBGC lien release and a $4.0M credit agreement provided tangible balance sheet and liquidity progress, with $300k contributed to the pension plan and financing to purchase new manufacturing equipment .
What Went Wrong
- Revenue declined 4.5% year over year; digital product lease and maintenance fell 16.6% YoY on structural declines in older outdoor display rental/maintenance bases .
- Going concern risk persists with working capital deficiency of $2.8M, limited liquidity, and defaults on Notes/Debentures (remaining principal $0.626M and $0.334M, respectively, as of June 30, 2016) .
- Cash fell to $0.292M at quarter-end; management continues to seek additional financing to meet fixed cash obligations (debt, pension, leases), underscoring near‑term liquidity constraints .

Metric	Q4 2015	Q1 2016	Q2 2016
Revenue ($USD Millions)	$5.007	$3.837	$5.774
Diluted EPS ($USD)	-$0.41	-$0.68	$0.02
Net Income ($USD Millions)	-$0.659	-$1.117	$0.082

Margins	Q2 2015	Q1 2016	Q2 2016
Gross Margin (%)	23.0%	22.8%	27.0%

Segment breakdown (Revenue and Operating Income):

Segment	Q2 2015	Q1 2016	Q2 2016
Digital Product Sales – Revenue ($USD Millions)	$5.114	$3.000	$4.998
Digital Product Sales – Operating Income ($USD Millions)	$0.120	-$0.360	$0.608
Digital Product Lease & Maintenance – Revenue ($USD Millions)	$0.930	$0.837	$0.776
Digital Product Lease & Maintenance – Operating Income ($USD Millions)	$0.241	$0.269	$0.222
Corporate G&A ($USD Millions)	-$0.811	-$0.872	-$0.799

KPIs:

KPI	Q1 2016	Q2 2016
Cash and Equivalents ($USD Millions)	$0.616	$0.292
Total Debt ($USD Millions)	$0.960	$1.460
Working Capital Deficiency ($USD Millions)	$2.9	$2.8
Current Pension Liability ($USD Millions)	$1.0	$0.958

Additional non-GAAP:

Non-GAAP Metric	Q2 2015	Q2 2016
EBITDA ($USD Millions)	$0.122	$0.490

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	Q3/Q4 2016	Not provided	Not provided (no formal guidance in Q2 press release or 10-Q)	Maintained (no guidance)
Margins/OpEx/Tax	FY/2H 2016	Not provided	Not provided (no formal guidance)	Maintained (no guidance)
Dividends (Series B Preferred)	2016	Declared $4.72/share (April 15, 2016)	Paid $78k on May 26, 2016	Maintained
Liquidity Facility	July 2016	N/A	New $4.0M Credit & Security Agreement (revolver up to $3.0M at prime+4%; $1.0M term loan at prime+6%)	Raised (new facility)

Note: No Q2 2016 earnings call transcript identified; themes based on press releases and 10-Q.

Topic	Previous Mentions (Q4 2015 and Q1 2016)	Current Period (Q2 2016)	Trend
Liquidity/Financing	Emphasis on margin improvement and lower OpEx; rights offering in 2015	$4.0M credit agreement; PBGC lien release after additional contributions	Improving access to liquidity
Product Performance (Sales)	Q1 2016: Sales decline in scoreboard and lighting markets	Q2 2016: Lighting market softness; sales revenue down 2.3% YoY; sales operating income up on cost control	Mixed: revenue pressure, margin gains
Lease & Maintenance Base	Ongoing decline in older outdoor display rentals	Continued decline; revenue down 16.6% YoY	Structural decline
Regulatory/Legal (Pension)	PBGC lien on assets; minimum required contributions	PBGC lien released; additional $300k contribution	Improving risk profile
Manufacturing Investment	Not discussed	New Prima Power equipment to enhance production lead times	Capex executing

“These improvements to operating results, working capital liquidity and our financial statements position us well for continued growth,” said CEO J.M. Allain, noting Q2 profitability despite slightly lower revenues .
“As we move into the second half of 2016, our continued primary focus will be increasing bottom line profits by expanding our product line, promoting our brand and establishing new channel partners” .
On financing and pension: “The PBGC decision and the financing facility in particular come after an exhaustive review of our business and our forecast… We are pleased that we see concrete fruits of our labor relating to the comprehensive restructuring” .

No Q2 2016 earnings call transcript found; no Q&A to report [ListDocuments returned none].

S&P Global (Capital IQ) consensus estimates for Q2 2016 EPS and revenue were unavailable for TNLX; our attempt to retrieve SPGI data failed due to missing mapping/coverage. Absent consensus, comparisons to estimates cannot be made for this quarter (S&P Global coverage not available).

Positive inflection: first profitable quarter in recent periods with $0.082M net income and $0.490M EBITDA, supported by a 400+ bps gross margin expansion to 27.0% .
Margin-driven operating leverage: digital product sales operating income rose to $0.608M despite modest revenue decline, reflecting effective cost controls and mix .
Liquidity actions reduce risk: PBGC lien release and $4.0M credit facility bolster working capital and fund equipment purchases; debt tender diminishes defaulted notes/debentures outstanding .
Structural headwinds in legacy rental/maintenance base persist; lease/maintenance revenue down 16.6% YoY—keep expectations conservative for this segment .
Balance sheet caution: cash of $0.292M and working capital deficiency of $2.8M underscore continued financing needs; monitor covenant compliance (fixed charge coverage ratio ≥1.1x) and pension contribution schedule .
No formal guidance provided; focus near term on sequential margin sustainability and order conversion in sales while tracking liquidity execution and capex ramp at Hazelwood, MO .
Trading lens: in thinly covered OTC names, narrative momentum (profitability, financing milestones) can catalyze moves; risks remain tied to liquidity, pension obligations, and defaulted debt management .