Backlog increased to $50.8 million, Customer confidence remains high
WESTMINSTER, MA / ACCESSWIRE / February 29, 2024 / 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 third quarter of fiscal year 2024.
"Customer confidence remains high, further strengthening the backlog to $50.8 million as of December 31, 2023, from $44.6 million as of September 30, 2023," stated Alexander Shen, TechPrecision's Chief Executive Officer. "Third quarter consolidated net sales were $7.6 million when compared to $8.3 million in the fiscal 2023 third quarter, or 8% lower."
"The third quarter net sales were dampened by a lower number of labor hours available during the November/December holiday calendar," Mr. Shen continued. "Our operating losses at Stadco have narrowed year over year. We expect to deliver our backlog over the course of the next one to three fiscal years with revenue growth and gross margin expansion."
"Consolidated gross profit was $1.2 million or $0.3 million lower than the same quarter a year ago. We also spent approximately $1.0 million on due diligence costs related to a potential acquisition in the quarter. The sum of the gross profit shortfall and and business development costs fell directly to our bottom line for the third quarter."
The following summary compares the three and nine months ended December 31, 2023 to the same prior year period:
Consolidated Financial Results - Fiscal 2024 Three Months Ended December 31, 2023
| Net sales were $7.7 million, a or 8% lower when compared to the same period in fiscal 2023, on a different proportionate project mix of products and a decline in utilized labor hours. | |
| Cost of sales were $6.5 million, or 5% lower, due primarily to lower revenue. | |
| Gross profit was $1.2 million, or 23% lower, primarily due to the top line revenue decline. | |
| SG&A increased by $0.9 million, due primarily to increased expenditures for outside advisory services in connection with due diligence of a potential acquisition target. | |
| Operating loss was $1.0 million compared to operating income of $0.3 million in the same period a year ago. | |
| Interest expense was higher due to increased borrowing and higher interest rates under the revolver loan. |
Consolidated Financial Results - Fiscal 2024 Nine Months Ended December 31, 2023
| Net sales were $23.0 million, or 4% lower when compared to the same period in fiscal 2023, on a different proportionate project mix of products and a decline in direct labor hours. | |
| Cost of sales were $20.1 million, or 1% higher, due primarily to underapplied factory overhead. | |
| Gross profit was $2.9 million, or 29% lower, primarily due to the top line revenue decline. |
| SG&A was $0.6 million higher, an increase of 14% compared to the same period last year, due to outside advisory and business development expenses in connection with a potential acquisition. | |
| Operating loss was $2.2 million compared to operating loss of $0.4 million in the same period a year ago. | |
| Interest expense was higher due to increased borrowing and interest rates under the revolver loan. |
Financial Position
On December 31, 2023, TechPrecision had $0.4 million in cash and cash equivalents, a decrease since March 31, 2023. Working capital was negative at December 31, 2023 as the Company reclassified all of its long-term debt to current because of a debt covenant violation. Working capital was $5.6 million at March 31, 2023. Total debt at December 31, 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 conflicts in Eastern Europe and the Middle East, 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.
-- Tables Follow --
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) December 31, | March 31, | |||||||
| 2023 | 2023 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 391,245 | $ | 534,474 | ||||
Accounts receivable, net | 2,192,061 | 2,336,481 | ||||||
Contract assets | 8,372,183 | 8,947,811 | ||||||
Raw materials | 2,054,348 | 1,692,852 | ||||||
Work-in-process | 1,586,187 | 719,736 | ||||||
Other current assets | 653,603 | 348,983 | ||||||
Total current assets | 15,249,627 | 14,580,337 | ||||||
Property, plant and equipment, net | 15,429,441 | 13,914,024 | ||||||
Right-of-use assets, net | 5,149,898 | 5,660,938 | ||||||
Deferred income taxes | 2,494,544 | 1,931,186 | ||||||
Other noncurrent assets, net | 121,256 | 121,256 | ||||||
Total assets | $ | 38,444,766 | $ | 36,207,741 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY: | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,727,108 | $ | 2,224,320 | ||||
Accrued expenses | 2,716,088 | 2,533,185 | ||||||
Contract liabilities | 4,035,384 | 2,333,591 | ||||||
Current portion of long-term lease liability | 727,683 | 711,727 | ||||||
Current portion of long-term debt, net | 7,434,623 | 1,218,162 | ||||||
Total current liabilities | 16,640,886 | 9,020,985 | ||||||
Long-term debt, net | -- | 4,749,139 | ||||||
Long-term lease liability | 4,595,170 | 5,143,974 | ||||||
Other noncurrent liability | 4,373,494 | 2,699,492 | ||||||
Total liabilities | 25,609,550 | 21,613,590 | ||||||
Stockholders' Equity: | ||||||||
Common stock - par value $.0001 per share, shares authorized: 50,000,000; Shares issued and outstanding: 8,762,432 at December 31, 2023 and 8,613,408 at March 31, 2023 | 876 | 861 | ||||||
Additional paid in capital | 15,111,901 | 14,949,729 | ||||||
Accumulated deficit | (2,277,561 | ) | (356,439 | ) | ||||
Total stockholders' equity | 12,835,216 | 14,594,151 | ||||||
Total liabilities and stockholders' equity | $ | 38,444,766 | $ | 36,207,741 | ||||
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Net sales | $ | 7,649,663 | $ | 8,327,345 | $ | 22,990,989 | $ | 23,926,349 | ||||||||
Cost of sales | 6,488,859 | 6,828,458 | 20,101,221 | 19,870,572 | ||||||||||||
Gross profit | 1,160,804 | 1,498,887 | 2,889,768 | 4,055,777 | ||||||||||||
Selling, general and administrative | 2,156,866 | 1,224,572 | 5,062,983 | 4,426,894 | ||||||||||||
(Loss) income from operations | (996,062 | ) | 274,315 | (2,173,215 | ) | (371,117 | ) | |||||||||
Other income | 1 | 254 | 40,877 | 40,590 | ||||||||||||
Interest expense | (109,503 | ) | (93,603 | ) | (352,142 | ) | (260,978 | ) | ||||||||
Refundable employee retention tax credits | -- | -- | -- | 624,045 | ||||||||||||
Total other (expense) income | (109,502 | ) | (93,349 | ) | (311,265 | ) | 403,657 | |||||||||
(Loss) income before income taxes | (1,105,564 | ) | 180,966 | (2,484,480 | ) | 32,540 | ||||||||||
Income tax (benefit) expense | (240,230 | ) | 46,991 | (563,358 | ) | 8,786 | ||||||||||
Net (loss) income | $ | (865,334 | ) | $ | 133,975 | $ | (1,921,122 | ) | $ | 23,754 | ||||||
Net (loss) earnings per share basic | $ | (0.10 | ) | $ | 0.02 | $ | (0.22 | ) | $ | 0.00 | ||||||
Net (loss) earnings per share diluted | $ | (0.10 | ) | $ | 0.01 | $ | (0.22 | ) | $ | 0.00 | ||||||
Weighted average shares outstanding - basic | 8,759,171 | 8,610,990 | 8,698,034 | 8,590,838 | ||||||||||||
Weighted average shares outstanding - diluted | 8,759,171 | 9,033,677 | 8,698,034 | 9,009,867 | ||||||||||||
TECHPRECISION CORPORATION
NET SALES, COST OF SALES, GROSS PROFIT BY SEGMENT (UNAUDITED)
| Three Months Ended December 31, 2023 | Three Months Ended December 31, 2022 | Changes | ||||||||||||||||||||||
(dollars in thousands) | Amount | Percent of Net sales | Amount | Percent of Net sales | Amount | Percent | ||||||||||||||||||
Net sales | ||||||||||||||||||||||||
Ranor | $ | 4,296 | 56 | % | $ | 4,735 | 57 | % | $ | (439 | ) | (9 | )% | |||||||||||
Stadco | 3,370 | 44 | % | 3,592 | 43 | % | (222 | ) | (6 | )% | ||||||||||||||
Intersegment elimination | (16 | ) | -- | % | -- | -- | % | (16 | ) | nm | % | |||||||||||||
Consolidated Net sales | $ | 7,650 | 100 | 5 | $ | 8,327 | 100 | % | $ | (677 | ) | (8 | )% | |||||||||||
Cost of sales | ||||||||||||||||||||||||
Ranor | $ | 2,919 | 38 | % | $ | 3,056 | 37 | % | $ | (137 | ) | (4 | )% | |||||||||||
Stadco | 3,570 | 47 | % | 3,773 | 45 | % | (203 | ) | (5 | )% | ||||||||||||||
Consolidated Cost of sales | $ | 6,489 | 85 | % | $ | 6,828 | 82 | % | $ | (339 | ) | (5 | )% | |||||||||||
Gross profit (loss) | ||||||||||||||||||||||||
Ranor | $ | 1,377 | 18 | % | $ | 1,680 | 20 | % | $ | (303 | ) | (18 | )% | |||||||||||
Stadco | (216 | ) | (3 | )% | (181 | ) | (2 | )% | (35 | ) | (19 | )% | ||||||||||||
Consolidated Gross profit | $ | 1,161 | 15 | % | $ | 1,499 | 18 | % | $ | (338 | ) | (23 | )% | |||||||||||
Nine Months Ended December 31, 2023 | Nine Months Ended December 31, 2022 | Changes | ||||||||||||||||||||||
(dollars in thousands) | Amount | Percent of Net sales | Amount | Percent of Net sales | Amount | Percent | ||||||||||||||||||
Net sales | ||||||||||||||||||||||||
Ranor | $ | 13,291 | 58 | % | $ | 14,395 | 60 | % | $ | (1,104 | ) | (8 | )% | |||||||||||
Stadco | 9,943 | 43 | % | 9,531 | 40 | % | 412 | 4 | % | |||||||||||||||
Intersegment elimination | (243 | ) | (1 | )% | -- | -- | % | (243 | ) | nm | % | |||||||||||||
Consolidated Net sales | $ | 22,991 | 100 | % | $ | 23,926 | 100 | % | $ | (935 | ) | (4 | )% | |||||||||||
Cost of sales | ||||||||||||||||||||||||
Ranor | $ | 9,364 | 40 | % | $ | 8,849 | 37 | % | $ | 515 | 6 | % | ||||||||||||
Stadco | 10,737 | 47 | % | 11,022 | 46 | % | (285 | ) | (3 | )% | ||||||||||||||
Consolidated Cost of sales | $ | 20,101 | 87 | % | $ | 19,871 | 83 | % | $ | 230 | 1 | % | ||||||||||||
Gross profit (loss) | ||||||||||||||||||||||||
Ranor | $ | 3,703 | 16 | % | $ | 5,546 | 23 | % | $ | (1,843 | ) | (33 | )% | |||||||||||
Stadco | (813 | ) | (3 | )% | (1,491 | ) | (6 | )% | 678 | 45 | % | |||||||||||||
Consolidated Gross profit | $ | 2,890 | 13 | % | $ | 4,055 | 17 | % | $ | (1,165 | ) | (29 | )% | |||||||||||
nm - not meaningful
TECHPRECISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net (loss) income | $ | (1,921,122 | ) | $ | 23,754 | |||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,758,925 | 1,666,741 | ||||||
Amortization of debt issue costs | 54,820 | 39,961 | ||||||
Stock-based compensation expense | 196,200 | 307,619 | ||||||
Change in contract loss provision | 155,317 | 100,880 | ||||||
Deferred income taxes | (563,358 | ) | 8,785 | |||||
Gain on disposal of fixed assets | (40,399 | ) | (468 | ) | ||||
Change in fair value for contingent consideration | -- | 63,436 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 144,420 | 81,842 | ||||||
Contract assets | 575,628 | (1,006,010 | ) | |||||
Work-in-process and raw materials | (1,227,947 | ) | (57,450 | ) | ||||
Other current assets | (304,620 | ) | 435,435 | |||||
Accounts payable | (497,212 | ) | (166,749 | ) | ||||
Accrued expenses | (526,899 | ) | (1,741,606 | ) | ||||
Contract liabilities | 1,701,793 | 139,944 | ||||||
Other noncurrent liabilities | 1,674,002 | 974,737 | ||||||
Net cash provided by operating activities | 1,179,548 | 870,851 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Proceeds from insurance claim and sale on fixed assets | 61,944 | 7,000 | ||||||
Fixed asset deposit | -- | (605,200 | ) | |||||
Purchases of property, plant and equipment | (2,782,346 | ) | (663,033 | ) | ||||
Net cash used in investing activities | (2,720,402 | ) | (1,261,233 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Debt issue costs | (39,963 | ) | (43,945 | ) | ||||
Revolver loan payments and borrowings, net | 1,900,000 | 187,998 | ||||||
Payments of principal for leases | (14,877 | ) | (31,058 | ) | ||||
Repayments of long-term debt | (447,535 | ) | (458,567 | ) | ||||
Net cash provided by (used in) financing activities | 1,397,625 | (345,572 | ) | |||||
Net decrease in cash and cash equivalents | (143,229 | ) | (735,954 | ) | ||||
Cash and cash equivalents, beginning of period | 534,474 | 1,052,139 | ||||||
Cash and cash equivalents, end of period | $ | 391,245 | $ | 316,185 | ||||
TECHPRECISION CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of EBITDA to Net (Loss) Income
(UNAUDITED)
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 for the following periods:
| Three Months ended December 31, | Nine Months ended December 31, | |||||||||||||||||||||||
(dollars in thousands) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||||||||||||||
Net (loss) income | $ | (865 | ) | $ | 134 | (999 | ) | $ | (1,921 | ) | $ | 24 | $ | (1,945 | ) | |||||||||
Income tax (benefit) expense | (240 | ) | 47 | (287 | ) | (563 | ) | 9 | (572 | ) | ||||||||||||||
Interest expense (1) | 109 | 94 | 15 | 352 | 261 | 91 | ||||||||||||||||||
Depreciation and amortization | 631 | 550 | 81 | 1,759 | 1,667 | 92 | ||||||||||||||||||
EBITDA | $ | (365 | ) | $ | 825 | (1,190 | ) | $ | (373 | ) | $ | 1,961 | $ | (2,334 | ) | |||||||||
(1) Includes amortization of debt issue costs.
| 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: [email protected] | Website: www.haydenir.com |
| Website: www.techprecision.com |
SOURCE: TechPrecision Corp