Second quarter focused on acquisition and integration of STADCO
WESTMINSTER, MA / ACCESSWIRE / December 7, 2021 / 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 and precision industrial sectors, today reported financial results for the Fiscal 2022 second quarter ended September 30, 2021.
Second quarter net sales were $4.8 million or 2% higher when compared to $4.7 million in the same quarter a year ago. Gross profit was 18% lower at $0.9 million when compared to gross profit of $1.1 million for the second quarter a year ago, but 12% higher than the first quarter of fiscal 2022.
"Our financials for the second quarter of fiscal 2022 include 36 days of activity from our newly acquired subsidiary, STADCO. As we began to integrate the STADCO operations, we recognized additional revenue, but absorbed additional costs that dampened our margins, and added to our selling, general and administrative, and interest expenses," stated Alexander Shen, TechPrecision's Chief Executive Officer. "Our backlog for sales orders was $26.4 at September 30, 2021, which included the addition of STADCO backlog."
"Key personnel and assets remain in place as we begin to integrate the STADCO business," added Mr. Shen. "We believe business prospects are good as we expect higher revenues for the Company in future quarters."
Second Quarter of Fiscal 2022 Financial Results
- Net sales, including STADCO revenue for the 36-day period, were $4.8 million, or 2% higher when compared to the same quarter a year ago.
- Cost of sales were $3.9 million, higher by 8% than the same quarter a year ago.
- Gross profit was $0.9, a decrease of 18% compared to $1.1 million in the same quarter last year.
- SG&A increased by $0.5 million, primarily on higher expenses due to the STADCO acquisition, including approximately $234,000 of acquisition related costs.
- Operating loss was $243,000, compared to operating income $433,000, in the same quarter a year ago.
- Interest expense increased by 34% as we added more debt to the balance sheet in August 2021.
- Net loss was $220,000 compared to net income of $271,000 for the same period a year ago.
- EBITDA* was $0.1 million, compared to $0.6 million in the same prior year period.
* EBITDA is a non-GAAP financial measure, which is reconciled to the most directly comparable GAAP financial measure below, under the caption "Reconciliation of EBITDA to Net Income (Loss)."
Six Months of Fiscal 2022 Financial Results
- Net sales, including STADCO revenue for the 36-day period, were $8.2 million, or 3% higher when compared to $8.0 million in the same period a year ago.
- Gross profit was $1.8 million, lower by 3% when compared to the same period last year.
- SG&A increased by $0.4 million, primarily on higher integration expenses due to the acquisition of STADCO.
- Operating loss was $143,000 compared to operating income of $337,000 in the same period a year ago.
- Interest expense compared favorably with the same period a year ago when we had higher average levels of debt.
- We recorded a gain of $1.3 million from the PPP loan forgiveness.
- Net income of $1.2 million compared to net income of $0.2 million in the same period a year ago.
- EBITDA* was $1.7 million compared to $0.7 million in the same period a year ago.
* EBITDA is a non-GAAP financial measure, which is reconciled to the most directly comparable GAAP financial measure below, under the caption "Reconciliation of EBITDA to Net Income (Loss)."
Financial Position
At September 30, 2021, TechPrecision had $0.3 million in cash and cash equivalents, a decrease of $1.8 million since March 31, 2021. In addition to using available cash, we sourced $7.6 million in cash from new debt and the sale of equity to help fund approximately $7.9 million in cash used to close the STADCO acquisition.
Working capital was $4.0 million at September 30, 2021 compared to $5.2 million at March 31, 2021. We have access to additional capital via the Company's existing revolver loan should management determine it needs to bolster liquidity.
Teleconference Information
The Company will hold a conference call at 4:30 p.m. Eastern (U.S.) time on December 7, 2021. To participate in the live conference call, please dial 1-888-506-0062 five to 10 minutes prior to the scheduled conference call time. International callers should dial 1-973-528-0011. When prompted, reference TechPrecision and entry code 662254.
A replay will be available until December 21, 2021. To access the replay, dial 1-877-481-4010 or 1-919-882-2331. When prompted, enter Conference Passcode 43688.
The call will also be available over the Internet and accessible at: https://www.webcaster4.com/Webcast/Page/2198/43688.
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, 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 change the composition of our revenues and effectively control operating expenses; external factors, including the COVID-19 pandemic, that may be outside of our control; the impacts of the COVID-19 pandemic and government-imposed lockdowns in response thereto; 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; unexpected costs, charges or expenses resulting from the acquisition of STADCO; 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). The results presented in this release are preliminary and subject to revision until the Company files its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021. 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(1)
(unaudited)
| September 30, 2021 | March 31, 2021 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 281,315 | $ | 2,130,711 | ||||
Accounts receivable | 2,649,309 | 608,059 | ||||||
Contract assets | 9,306,862 | 5,532,408 | ||||||
Raw materials | 926,524 | 503,636 | ||||||
Work-in-process | 766,007 | 767,520 | ||||||
Other current assets | 611,648 | 379,437 | ||||||
Total current assets | 14,541,665 | 9,921,771 | ||||||
Property, plant and equipment, net | 12,306,401 | 4,063,209 | ||||||
Right of use asset, net | 6,681,160 | -- | ||||||
Deferred income taxes | 1,986,297 | 1,934,415 | ||||||
Goodwill | 1,174,429 | -- | ||||||
Other noncurrent assets, net | -- | 84,624 | ||||||
Total assets | $ | 36,689,952 | $ | 16,004,019 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 2,778,020 | $ | 500,848 | ||||
Accrued expenses | 2,320,893 | 1,526,270 | ||||||
Contract liabilities | 1,113,920 | 218,152 | ||||||
Current portion lease liability | 530,177 | -- | ||||||
Current portion of long-term debt | 3,790,525 | 2,474,963 | ||||||
Total current liabilities | 10,533,535 | 4,720,233 | ||||||
Long-term debt, net | 3,331,444 | 1,341,938 | ||||||
Long-term lease liability | 6,168,642 | -- | ||||||
Total liabilities | 20,033,621 | 6,062,171 | ||||||
Stockholders' Equity: | ||||||||
Common stock - par value $.0001 per share, 90,000,000 shares authorized, 34,267,450 and 29,498,662 shares issued and outstanding, at September 30, 2021 and March 31, 2021 | 3,426 | 2,949 | ||||||
Additional paid in capital | 14,509,086 | 8,944,660 | ||||||
Accumulated other comprehensive income | 20,739 | 21,838 | ||||||
Retained earnings | 2,123,080 | 972,401 | ||||||
Total stockholders' equity | 16,656,331 | 9,941,848 | ||||||
Total liabilities and stockholders' equity | $ | 36,689,952 | $ | 16,004,019 | ||||
(1) Information included in this press release as of and for the three and six months ended September 30, 2021 is preliminary and subject to change prior to the filing of the Company's Quarterly Report on Form 10-Q with the Securities and Exchange Commission.
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS) (1)
(unaudited)
Three Months Ended September 30, | Six Months Ended September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
Net sales | $ | 4,797,410 | $ | 4,713,933 | $ | 8,209,639 | $ | 7,996,458 | ||||||||
Cost of sales | 3,866,703 | 3,585,073 | 6,446,264 | 6,170,584 | ||||||||||||
Gross profit | 930,707 | 1,128,860 | 1,763,375 | 1,825,874 | ||||||||||||
Selling, general and administrative | 1,173,689 | 696,016 | 1,906,297 | 1,489,378 | ||||||||||||
Income (loss) from operations | (242,982 | ) | 432,844 | (142,922 | ) | 336,496 | ||||||||||
Other income | 1,001 | 804 | 11,391 | 1,456 | ||||||||||||
Interest expense | (56,894 | ) | (51,582 | ) | (86,772 | ) | (109,480 | ) | ||||||||
PPP loan forgiveness | -- | -- | 1,317,100 | -- | ||||||||||||
Total other (expense) income | (55,893 | ) | (50,778 | ) | 1,241,719 | (108,024 | ) | |||||||||
Income (loss) before income taxes | (298,875 | ) | 382,066 | 1,098,797 | 228,472 | |||||||||||
Income tax expense (benefit) | (78,462 | ) | 111,302 | (51,882 | ) | 73,942 | ||||||||||
Net income (loss) | $ | (220,413 | ) | $ | 270,764 | $ | 1,150,679 | $ | 154,530 | |||||||
Other comprehensive loss: | ||||||||||||||||
Foreign currency translation adjustments | $ | (1,141 | ) | $ | (1,005 | ) | $ | (1,099 | ) | $ | (1,102 | ) | ||||
Other comprehensive loss | $ | (1,141 | ) | $ | (1,005 | ) | $ | (1,099 | ) | $ | (1,102 | ) | ||||
Comprehensive income (loss) | $ | (221,554 | ) | $ | 269,759 | $ | 1,149,580 | $ | 153,428 | |||||||
Net income (loss) per share basic | $ | (0.01 | ) | $ | 0.01 | $ | 0.04 | $ | 0.01 | |||||||
Net income (loss) per share diluted | $ | (0.01 | ) | $ | 0.01 | $ | 0.04 | $ | 0.01 | |||||||
Weighted average shares outstanding - basic | 31,359,941 | 29,431,629 | 30,424,216 | 29,395,791 | ||||||||||||
Weighted average shares outstanding - diluted | 31,359,941 | 30,987,233 | 32,026,262 | 31,002,130 | ||||||||||||
(1) Information included in this press release as of and for the three and six months ended September 30, 2021 is preliminary and subject to change prior to the filing of the Company's Quarterly Report on Form 10-Q with the Securities and Exchange Commission.
TECHPRECISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS(1)
(unaudited)
| Six Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income | $ | 1,150,679 | $ | 154,530 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 515,804 | 339,232 | ||||||
Amortization of debt issue costs | 18,096 | 31,086 | ||||||
Stock based compensation expense | 62,066 | 112,917 | ||||||
Change in contract loss provision | (100,497 | ) | (49,553 | |||||
Deferred income taxes | (51,882 | ) | 73,942 | |||||
PPP loan forgiveness | (1,317,100 | ) | -- | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (794,235 | ) | (388,317 | |||||
Contract assets | 56,153 | (1,475,912 | ||||||
Inventories | 505,814 | 126,457 | ||||||
Other current assets | 141,765 | 320,847 | ||||||
Accounts payable | (403,159 | ) | 25,308 | |||||
Accrued expenses | (1,588,991 | ) | 158,791 | |||||
Contract liabilities | 739,043 | (168,854 | ||||||
Net cash used in operating activities | (1,066,444 | ) | (739,526 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Business acquisition, net of cash acquired | (7,795,810 | ) | -- | |||||
Purchases of property, plant and equipment | (362,986 | ) | (354,788 | |||||
Net cash used in investing activities | (8,158,796 | ) | (354,788 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Closing costs related to common stock sale | (335,419 | ) | -- | |||||
Proceeds from sale of common stock | 3,523,000 | -- | ||||||
Debt issue costs | (109,532 | ) | (8,282 | |||||
Proceeds from term loan | 4,000,000 | -- | ||||||
Proceeds from payroll protection program loan | -- | 1,317,100 | ||||||
Revolver loan borrowings | 865,049 | -- | ||||||
Repayment of principal lease liability | (475,440 | ) | -- | |||||
Repayments long-term debt | (91,781 | ) | (53,614 | |||||
Net cash provided by financing activities | 7,375,877 | 1,255,204 | ||||||
Effect of exchange rate on cash and cash equivalents | (33 | ) | (133 | |||||
Net (decrease) increase in cash and cash equivalents | (1,849,396 | ) | 160,757 | |||||
Cash and cash equivalents, beginning of period | 2,130,711 | 930,856 | ||||||
Cash and cash equivalents, end of period | $ | 281,315 | $ | 1,091,613 | ||||
(1) Information included in this press release as of and for the three and six months ended September 30, 2021 is preliminary and subject to change prior to the filing of the Company's Quarterly Report on Form 10-Q with the Securities and Exchange Commission.
TECHPRECISION CORPORATION
SUPPLEMENTAL INFORMATION(1)
Reconciliation of EBITDA to Net Income (Loss)
The following table provides a reconciliation of EBITDA to net income (loss), the most directly comparable U.S. GAAP measure reported in our condensed consolidated financial statements for the following periods:
| Three Months ended September 30, | Six Months ended September 30, | |||||||||||||||||||||||
(dollars in thousands) | 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||
Net income (loss) | $ | (220 | ) | $ | 271 | $ | (491 | ) | $ | 1,151 | $ | 155 | $ | 996 | ||||||||||
Income tax expense (benefit) | (79 | ) | 111 | (190 | ) | (52 | ) | 74 | (126 | ) | ||||||||||||||
Interest expense (2) | 57 | 52 | 5 | 87 | 110 | (23 | ) | |||||||||||||||||
Depreciation | 333 | 170 | 163 | 516 | 339 | 177 | ||||||||||||||||||
EBITDA | $ | 91 | $ | 604 | $ | (513 | ) | $ | 1,702 | $ | 678 | $ | 1,024 | |||||||||||
(1) Information included in this press release as of and for the three and six months ended September 30, 2021 is preliminary and subject to change prior to the filing of the Company's Quarterly Report on Form 10-Q with the Securities and Exchange Commission.
(2) Includes amortization of debt issue costs.
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| Company Contact: | Investor Relations Contact: | |
| Mr. Thomas Sammons | Hayden IR | |
| Chief Financial Officer | Brett Maas | |
| TechPrecision Corporation | Phone: 646-536-7331 | |
| Phone: 978-883-5109 | Email: [email protected] | |
| Email: [email protected] | Website: www.haydenir.com | |
| Website: www.techprecision.com | ||
SOURCE: TechPrecision Corporation