TechPrecision Corporation Reports Third Quarter Financial Results

TechPrecision Corporation

Companies Mentioned:

Primary Exchange: OTCQB
Under the Symbol: TPCS

TechPrecision Corporation Reports Third Quarter Financial Results

Thursday, February 13, 2020 4:05 PM

Backlog reaches $17 million; highest level in over three years

WESTMINSTER, MA / ACCESSWIRE / February 13, 2020 / TechPrecision Corporation (OTCQB:TPCS) ("TechPrecision" or "the Company"), an industry leading manufacturer of precision, large-scale fabricated and machined metal components and tested systems with customers in the defense, energy and precision industrial sectors, today reported financial results for the third quarter and nine months ended December 31, 2019.

"Our results for the third quarter were negatively impacted by learning-curve related cost overruns that resulted in negative margins and increased loss provisions on a limited number of new projects," stated Alexander Shen, TechPrecision's Chief Executive Officer. "These new projects are an opportunity to demonstrate technical excellence in custom know-how of complex fabrication and complex machining, and represent a definite entry point into new business prospects. We expect improved margins going forward as these projects approach completion, costs stabilize, and additional profitable projects come on-line."

"The Company's sales order backlog reached its highest level in over three years increasing to $17.0 million at December 31, 2019 as approximately $15.3 million of additional orders were booked over the first nine months of fiscal 2020," stated Mr. Shen. "We continue to replenish backlog and we believe this will provide for a steady revenue stream and profitable margins in fiscal 2021."

In January 2020, the Company used $1.1 million from available cash and repaid in full the capital equipment obligation with Peoples Capital. This payment reduced our total debt obligations to $2.6 million at January 17, 2020 from $3.7 million at December 31, 2019, and facilitated increasing our revolving line of credit with Berkshire Bank from $1 million to $3 million.

"The debt repayment reduces our cash outflow and expense for debt principal and interest payments in future periods," added Mr. Shen, "while providing increased borrowing capacity and financial flexibility."

Third Quarter of Fiscal 2020 Financial Results

  • Net sales were $3.7 million or 14% lower when compared to $4.3 million in the same quarter a year ago.
  • Cost of sales were 2% higher than the prior year, impacted by a $0.3 million charge for loss contracts.
  • Gross profit was $0.3 million, down from $1.0 million in the same quarter last year.
  • Operating loss was $348,000 compared to operating income of $339,000 in the same period a year ago.

Nine Months of Fiscal 2020 Financial Results

  • Net sales were $11.1 million or 8% lower when compared to $12.0 million in the same period a year ago.
  • Cost of sales were 4% higher than the prior year, impacted by $0.8 million charge for loss contracts this fiscal year.
  • Gross profit was $1.8 million, down 41% when compared to the same period last year.
  • Operating loss was $0.3 million compared to operating income of $1.0 million in the same period a year ago.
  • Net loss was $0.4 for the nine months ended December 31, 2019, compared to net income of $0.6 million for the nine months ended December 31, 2018.
  • EBITDA was $0.3 million for the nine months ended December 31, 2019, $1.3 million lower when compared to the same period a year ago.

Financial Position

At December 31, 2019, TechPrecision had $2.0 million in cash and cash equivalents. Working capital was $5.4 million compared to working capital of $6.3 million at March 31, 2019.

Teleconference Information

The Company will hold a conference call at 4:30 p.m. Eastern (U.S.) time on February 13, 2020. To participate in the live conference call, please dial 1-844-407-9500 five to 10 minutes prior to the scheduled conference call time. International callers should dial 1-862-298-0850. When prompted, reference TechPrecision.

A replay will be available until March 13, 2020. To access the replay, dial 1-877-481-4010 or 1-919-882-2331. When prompted, enter Conference Passcode 58362. The call will also be available over the Internet and accessible at https://www.webcaster4.com/Webcast/Page/2198/33008.

About TechPrecision Corporation

TechPrecision Corporation, through its wholly owned subsidiary, Ranor, Inc., manufactures large-scale, metal fabricated and machined precision components and equipment. These products are used in a variety of markets including: defense, aerospace, nuclear, industrial, and medical. TechPrecision's goal is to be an end-to-end service provider to its customers by furnishing customized solutions for completed products requiring custom fabrication and machining, assembly, inspection and testing. To learn more about the Company, please visit the corporate website at http://www.techprecision.com. Information on the Company's website or any other website does not constitute a part of this press release.

Safe Harbor Statement

This release contains certain "forward-looking statements" relating to the business of the Company and its subsidiary companies. All statements other than statements of current or historical fact contained in this press release, including statements that express our intentions, plans, objectives, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions are forward-looking statements. The words "anticipate," "believe," "continue," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will," "should," "would" and similar expressions, as they relate to us, are intended to identify forward-looking statements. These statements are based on current expectations, estimates and projections made by management about our business, our industry and other conditions affecting our financial condition, results of operations or business prospects. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in, or implied by, the forward-looking statements due to numerous risks and uncertainties. Factors that could cause such outcomes and results to differ include, but are not limited to, risks and uncertainties arising from: our reliance on individual purchase orders, rather than long-term contracts, to generate revenue; our ability to balance the composition of our revenues and effectively control operating expenses; the availability of appropriate financing facilities impacting our operations, financial condition and/or liquidity; our ability to receive contract awards through competitive bidding processes; our ability to maintain standards to enable us to manufacture products to exacting specifications; our ability to enter new markets for our services; our reliance on a small number of customers for a significant percentage of our business; competitive pressures in the markets we serve; changes in the availability or cost of raw materials and energy for our production facilities; operating in a single geographic location; restrictions in our ability to operate our business due to our outstanding indebtedness; government regulations and requirements; pricing and business development difficulties; changes in government spending on national defense; our ability to make acquisitions and successfully integrate those acquisitions with our business; general industry and market conditions and growth rates; general economic conditions; and other risks discussed in the Company's periodic reports that are filed with the Securities and Exchange Commission and available on its website (www.sec.gov). Any forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to publicly update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this press release, except as required by applicable law. Investors should evaluate any statements made by us in light of these important factors.

-- Tables Follow --

TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)

             
 
 
December 31,
2019
   
March 31,
2019
 
ASSETS
           
Current assets:
           
Cash and cash equivalents
  1,968,405     2,036,646  
Accounts receivable
    752,984       1,010,443  
Contract assets
    3,800,928       4,390,832  
Inventories
    1,512,082       1,240,315  
Other current assets
    794,387       498,059  
Total current assets
    8,828,786       9,176,295  
Property, plant and equipment, net
    4,347,796       4,860,609  
Deferred income taxes
    2,119,439       2,004,346  
Other noncurrent assets, net
    43,913       6,233  
Total assets
  15,339,934     16,047,483  
 
               
LIABILITIES AND STOCKHOLDERS' EQUITY:
               
Current liabilities:
               
Accounts payable
  470,619     609,082  
Accrued expenses
    981,255       753,499  
Contract liabilities
    828,762       740,947  
Current portion of long-term debt
    1,167,518       822,105  
Total current liabilities
    3,448,154       2,925,633  
Long-term debt
    2,481,948       3,410,542  
Stockholders' Equity:
               
Common stock - par value $.0001 per share, 90,000,000 shares authorized,
29,254,594 and 29,234,594 shares issued and outstanding,
at December 31, 2019 and March 31, 2019
    2,925       2,923  
Additional paid in capital
    8,781,971       8,693,106  
Accumulated other comprehensive income
    21,611       21,940  
Retained earnings
    603,325       993,339  
Total stockholders' equity
    9,409,832       9,711,308  
Total liabilities and stockholders' equity
  15,339,934     16,047,483  
                 

TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(unaudited)

             
 
 
Three Months Ended
December 31,
   
Nine Months Ended
December 31,
 
 
  2019     2018     2019     2018  
Net sales
  3,667,276     4,270,396     11,075,620     11,990,404  
Cost of sales
    3,352,962       3,299,166       9,238,287       8,871,550  
Gross profit
    314,314       971,230       1,837,333       3,118,854  
Selling, general and administrative
    662,675       631,783       2,145,055       2,113,285  
(Loss) income from operations
    (348,361 )     339,447       (307,722 )     1,005,569  
Other income
    185       1,590       21,063       8,605  
Interest expense
    (69,328 )     (88,314 )     (218,447 )     (273,948 )
Total other expense, net
    (69,143 )     (86,724 )     (197,384 )     (265,343 )
(Loss) income before income taxes
    (417,504 )     252,723       (505,106 )     740,226  
Income tax (benefit) expense
    (97,734 )     34,701       (115,092 )     177,104  
Net (loss) income
  (319,770 )   218,022     (390,014 )   563,122  
Other comprehensive (loss) income, before tax:
                               
Foreign currency translation adjustments
  9     18     (329 )   (2,402 )
Other comprehensive (loss) income, net of tax
  9     18     (329 )   (2,402 )
Comprehensive (loss) income
  (319,761 )   218,040     (390,343 )   560,720  
Net (loss) income per share basic
  (0.01 )   0.01     (0.01 )   0.02  
Net (loss) income per share diluted
  (0.01 )   0.01     (0.01 )   0.02  
Weighted average number of shares outstanding:
                               
Basic
    29,254,594       28,858,560       29,254,230       28,835,957  
Diluted
    29,254,594       30,427,218       29,254,230       30,158,509  
                                 

TECHPRECISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

       
 
  Nine Months Ended December 31,  
 
  2019     2018  
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net (loss) income
  (390,014 )   563,122  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
               
Depreciation
    548,038       558,571  
Amortization of debt issue costs
    31,280       43,638  
Stock based compensation expense
    81,667       106,727  
Change in contract loss provision
    216,039       24,541  
Deferred income taxes
    (115,092 )     177,104  
Changes in operating assets and liabilities:
               
Accounts receivable
    257,459       1,299,194  
Inventories
    (271,767 )     (1,004,145 )
Contract assets
    589,904       (5,912,297 )
Other current assets
    (296,328 )     (14,174 )
Other noncurrent assets
    (9,419 )     (7,245 )
Accounts payable
    (138,463 )     279,893  
Accrued expenses
    18,282       202,860  
Contract liabilities
    87,815       3,803,087  
Net cash provided by operating activities
    609,401       120,876  
CASH FLOWS FROM INVESTING ACTIVITIES
               
Purchases of property, plant and equipment
    (35,225 )     (402,880 )
Net cash used in investing activities
    (35,225 )     (402,880 )
CASH FLOWS FROM FINANCING ACTIVITIES
               
Deferred loan costs
    (32,209 )     --  
Repayment of long-term debt
    (610,515 )     (569,809 )
Net cash used in financing activities
    (642,724 )     (569,809 )
Effect of exchange rate on cash and cash equivalents
    307       628  
Net decrease in cash and cash equivalents
    (68,241 )     (851,185 )
Cash and cash equivalents, beginning of period
    2,036,646       2,689,110  
Cash and cash equivalents, end of period
  1,968,405     1,837,925  
                 

TECHPRECISION CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of EBITDA to Net Income

The following table provides a reconciliation of EBITDA to net (loss) income, the most directly comparable U.S. GAAP measure reported in our condensed consolidated financial statements:

                   
(dollars in thousands)
  Nine months December 31, 2019     Nine months December 31, 2018    
Change
Amount
 
Net (loss) income
  (390 )   563     (953 )
Income tax (benefit) expense
    (115 )     177       (292 )
Interest expense (1)
    218       274       (56 )
Depreciation
    548       559       (11 )
EBITDA
  261     1,573     (1,312 )
                         
  1. Includes amortization of debt issue costs.

Company Contact:

Mr. Thomas Sammons
Chief Financial Officer
TechPrecision Corporation
Phone: 978-883-5109
Email: [email protected]
Website: www.techprecision.com

Investor Relations Contact:

Hayden IR
Brett Maas
Phone: 646-536-7331
Email: [email protected]
Website: www.haydenir.com

SOURCE: TechPrecision Corporation

 


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