TechPrecision Corporation Reports FY 2024 Third Quarter Financial Results

About this update from Techprecision Corporation

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 View the original press release on accesswire.com

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