High customer confidence drives strong backlog
WESTMINSTER, MA / ACCESSWIRE / August 21, 2023 / TechPrecision Corporation (NASDAQ: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 and precision industrial sectors, today reported financial results for the first quarter of fiscal year 2024.
"Customer confidence remains high, driving a strong backlog increase. Total consolidated backlog is at a strong $46.3 million as of June 30, 2023. First quarter consolidated net sales were $7.4 million, or 4% higher when compared to $7.1 million in fiscal 2023 first quarter," stated Alexander Shen, TechPrecision's Chief Executive Officer.
"On a consolidated basis, we had a net loss of $527,000. Our Stadco subsidiary reported strong revenue growth with net sales of $3.0 million or 26% higher than the same period a year ago. Stadco gross profit improved, reporting a loss of $588,000 versus a loss of $1.023 million from the same period a year ago, an improvement of $435,000.Ranor reported net sales of $4.5 million or a 5% decrease from the first quarter of fiscal 2023."
"First quarter net sales for Stadco compared favorably with the same period a year ago," Mr. Shen continued. "Our losses have narrowed year over year. With continued revenue growth, we expect gradual improvement in gross profit and gross margin. We expect to deliver our strong backlog of $46.3 million over the course of the next one to three fiscal years with revenue growth and gross margin expansion."
The following summary compares the three months ended June 30, 2023 to the same prior year period:
Consolidated Financial Results - Fiscal 2024 Three Months Ended June 30, 2023
- Net sales were $7.4 million, an increase of 4% when compared to the same period in fiscal 2023. Net sales at Stadco increased by 26% on a more favorable project mix. Ranor net sales decreased by 5% year over year with a less favorable project mix.
- Cost of sales were $6.7 million, or 7% higher, due primarily to higher manufacturing costs at Ranor, due to a less favorable project mix.
- Gross profit was $0.7 million, or 15% lower when compared to the same period last year. Gross profit decreased at Ranor on a less favorable project mix. Losses at Stadco narrowed year over year on improved overall margins on projects, partially offset by increased underabsorbed factory overhead.
- SG&A was $1.3 million, a decrease of $0.1 million, primarily due to cost reductions at Stadco.
- Operating loss increased by approximately $22,000 when compared to the same period a year ago.
- Net loss per share was $ 0.06.
Financial Position
On June 30, 2023, TechPrecision had $0.3 million in cash and cash equivalents, a decrease since March 31, 2023. Working capital was $4.9 million at June 30, 2023 compared to $5.6 million at March 31, 2023 as the Company borrowed more under its revolving line of credit. Total debt at June 30, 2023 and March 31, 2023 was $7.6 million and $6.1 million, respectively.
About TechPrecision Corporation
TechPrecision Corporation, through its wholly owned subsidiaries, Ranor, Inc. and Stadco, manufactures large-scale, metal fabricated and machined precision components and equipment. These products are used in a variety of markets including: defense, aerospace, nuclear, medical, and precision industrial. 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," "prospects," "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; external factors that may be outside our control, including health emergencies, like epidemics or pandemics, the Russia- Ukraine conflict, price inflation, interest rate increases and supply chain inefficiencies; 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; 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; our failure to maintain effective internal controls over financial reporting; general industry and market conditions and growth rates; 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.
| Company Contact: | Investor Relations Contact: | |
| Barbara M. Lilley | Hayden IR | |
| Chief Financial Officer | Brett Maas | |
| TechPrecision Corporation | Phone: 646-536-7331 | |
| Phone: 978-883-5102 | Email: [email protected] | |
| Email: lilleyb@ranor.com | Website: www.haydenir.com | |
| Website: www.techprecision.com |
-- Tables Follow -
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| June 30, | March 31, | |||||||
| 2023 | 2023 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 271,918 | $ | 534,474 | ||||
Accounts receivable, net | 2,965,696 | 2,336,481 | ||||||
Contract assets | 8,651,343 | 8,947,811 | ||||||
Raw materials | 1,635,748 | 1,692,852 | ||||||
Work-in-process | 816,702 | 719,736 | ||||||
Other current assets | 324,457 | 348,983 | ||||||
Total current assets | 14,665,864 | 14,580,337 | ||||||
Property, plant and equipment, net | 15,376,726 | 13,914,024 | ||||||
Right of use asset, net | 5,492,504 | 5,660,938 | ||||||
Deferred income taxes | 2,077,616 | 1,931,186 | ||||||
Other noncurrent assets, net | 121,256 | 121,256 | ||||||
Total assets | $ | 37,733,966 | $ | 36,207,741 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 743,933 | $ | 2,224,320 | ||||
Accrued expenses | 2,552,449 | 2,533,185 | ||||||
Contract liabilities | 2,853,695 | 2,333,591 | ||||||
Current portion of long-term lease liability | 715,707 | 711,727 | ||||||
Current portion of long-term debt, net | 2,865,387 | 1,218,162 | ||||||
Total current liabilities | 9,731,171 | 9,020,985 | ||||||
Long-term debt, net | 4,603,255 | 4,749,139 | ||||||
Long-term lease liability | 4,963,082 | 5,143,974 | ||||||
Other noncurrent liability | 4,369,762 | 2,699,492 | ||||||
Total liabilities | 23,667,270 | 21,613,590 | ||||||
Stockholders' Equity: | ||||||||
Common stock - par value $.0001 per share, shares authorized: 50,000,000; Shares issued and outstanding: June 30, 2023 and March 31, 2023 - 8,613,408 | 861 | 861 | ||||||
Additional paid in capital | 14,949,729 | 14,949,729 | ||||||
Accumulated deficit | (883,894 | ) | (356,439 | ) | ||||
Total stockholders' equity | 14,066,696 | 14,594,151 | ||||||
Total liabilities and stockholders' equity | $ | 37,733,966 | $ | 36,207,741 | ||||
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three months ended June 30, | ||||||||
| 2023 | 2022 | |||||||
Net sales | $ | 7,371,240 | $ | 7,076,357 | ||||
Cost of sales | 6,677,091 | 6,259,139 | ||||||
Gross profit | 694,149 | 817,218 | ||||||
Selling, general and administrative | 1,273,949 | 1,375,227 | ||||||
Loss from operations | (579,800 | ) | (558,009 | ) | ||||
Other income (expense), net | 1 | (33,225 | ) | |||||
Interest expense | (94,086 | ) | (83,645 | ) | ||||
Total other income (expense), net | (94,085 | ) | (116,870 | ) | ||||
Loss before income taxes | (673,885 | ) | (674,879 | ) | ||||
Income tax benefit | (146,430 | ) | (173,714 | ) | ||||
Net loss | $ | (527,455 | ) | $ | (501,165 | ) | ||
Net loss per share - basic | $ | (0.06 | ) | $ | (0.06 | ) | ||
Net loss per share - diluted | $ | (0.06 | ) | $ | (0.06 | ) | ||
Weighted average number of shares outstanding - basic | 8,613,408 | 8,576,863 | ||||||
Weighted average number of shares outstanding - diluted | 8,613,408 | 8,576,863 | ||||||
TECHPRECISION CORPORATION
NET SALES, COST OF SALES, GROSS PROFIT BY SEGMENT (UNAUDITED)
| June 30, 2023 | June 30, 2022 | Changes | ||||||||||||||||||||||
(dollars in thousands) | Amount | Percent of Net sales | Amount | Percent of Net sales | Amount | Percent | ||||||||||||||||||
Net sales | ||||||||||||||||||||||||
Ranor | $ | 4,499 | 61 | % | $ | 4,726 | 67 | % | $ | (227 | ) | (5 | )% | |||||||||||
Stadco | 2,967 | 40 | % | 2,350 | 33 | % | 617 | 26 | % | |||||||||||||||
Intersegment elimination | (95 | ) | (1 | )% | -- | -- | % | (95 | ) | nm | % | |||||||||||||
Consolidated Net sales | $ | 7,371 | 100 | % | $ | 7,076 | 100 | % | $ | 295 | 4 | % | ||||||||||||
Cost of sales | ||||||||||||||||||||||||
Ranor | $ | 3,122 | 43 | % | $ | 2,886 | 41 | % | $ | 236 | 8 | % | ||||||||||||
Stadco | 3,555 | 48 | % | 3,373 | 48 | % | 182 | 5 | % | |||||||||||||||
Consolidated Cost of sales | $ | 6,677 | 91 | % | $ | 6,259 | 89 | % | $ | 418 | 7 | % | ||||||||||||
Gross profit | ||||||||||||||||||||||||
Ranor | $ | 1,282 | 17 | % | $ | 1,840 | 26 | % | $ | (558 | ) | (30 | )% | |||||||||||
Stadco | (588 | ) | (8 | )% | (1,023 | ) | (14 | )% | 435 | 43 | % | |||||||||||||
Consolidated Gross profit | $ | 694 | 9 | % | $ | 817 | 12 | % | $ | (123 | ) | (15 | )% | |||||||||||
nm - not meaningful
TECHPRECISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| Three Months Ended June 30, | ||||||||
| 2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (527,455 | ) | $ | (501,165 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 559,735 | 585,361 | ||||||
Amortization of debt issue costs | 18,761 | 13,399 | ||||||
Stock based compensation expense | -- | 52,107 | ||||||
Change in contract loss provision | 16,170 | 18,402 | ||||||
Deferred income taxes | (146,430 | ) | (173,714 | ) | ||||
Change in fair value for contingent consideration | -- | (33,474 | ) | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (629,215 | ) | 501,882 | |||||
Contract assets | 296,468 | (452,411 | ) | |||||
Work-in-process and raw materials | (39,861 | ) | (665,192 | ) | ||||
Other current assets | 24,526 | 693,394 | ||||||
Accounts payable | (1,480,387 | ) | 481,208 | |||||
Accrued expenses | (167,629 | ) | (85,348 | ) | ||||
Contract liabilities | 520,104 | 21,083 | ||||||
Other noncurrent liabilities | 1,670,270 | 993,203 | ||||||
Net cash provided by operating activities | 115,057 | 1,448,735 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Fixed asset deposit | -- | (559,000 | ) | |||||
Purchases of property, plant, and equipment | (1,854,002 | ) | (203,981 | ) | ||||
Net cash used in investing activities | (1,854,002 | ) | (762,981 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Debt issue costs | -- | (6,268 | ) | |||||
Revolver loan payments and borrowings, net | 1,630,000 | (987,002 | ) | |||||
Payments of principal for leases | (6,191 | ) | (16,860 | ) | ||||
Repayments of long-term debt | (147,420 | ) | (154,125 | ) | ||||
Net cash provided by (used in) financing activities | 1,476,389 | (1,164,255 | ) | |||||
Net decrease in cash and cash equivalents | (262,556 | ) | (478,501 | ) | ||||
Cash and cash equivalents, beginning of period | 534,474 | 1,052,139 | ||||||
Cash and cash equivalents, end of period | $ | 271,918 | $ | 573,638 | ||||
TECHPRECISION CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of EBITDA to Net Loss
(UNAUDITED)
The following table provides a reconciliation of EBITDA to net loss, the most directly comparable U.S. GAAP measure reported in our condensed consolidated financial statements for the following periods:
| June 30, | June 30, | Change | ||||||||||
(Dollars in thousands) | 2023 | 2022 | Amount | |||||||||
Net loss | $ | (527 | ) | $ | (501 | ) | $ | (26 | ) | |||
Income tax benefit | (146 | ) | (174 | ) | 28 | |||||||
Interest expense (1) | 94 | 84 | 10 | |||||||||
Depreciation and amortization | 560 | 585 | (25 | ) | ||||||||
EBITDA | $ | (19 | ) | $ | (6 | ) | $ | (13 | ) | |||
(1) Includes amortization of debt issue costs.
SOURCE: TechPrecision Corporation