TechPrecision Corporation Reports Second Quarter Fiscal 2023 Financial Results

About this update from Techprecision Corporation

Net Sales increase 78% year-over-year to $8.5 million WESTMINISTER, MA / ACCESSWIRE / November 17, 2022 / 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 second quarter of fiscal year 2023 ended September 30, 2022 . "Second quarter consolidated net sales were $8.5 million or 78% higher when compared to $4.8 million in same quarter a year ago," stated Alexander Shen , TechPrecision's Chief Executive Officer. "Our Ranor segment reported a strong second quarter with net sales of $4.9 million and gross profit of $2.0 million . Our second quarter net sales also included $3.6 million from our Stadco subsidiary, which was acquired on August 25, 2021 ." "We continue to rebuild Stadco manufacturing and throughput," Mr. Shen continued. "We recorded an operating loss at our Stadco segment for the second quarter of fiscal 2023. We will continue to focus on shepherding cash, rebuilding customer and supplier relationships, establishing operational discipline, improving gross margins, and growing the backlog. Total backlog remained strong at $49.4 million on September 30, 2022 , an increase of $23.0 million since September 30, 2021 , the end of the initial quarter that included Stadco . We expect to deliver that backlog over the course of the next one to three fiscal years with improved gross margins in future quarters." Furthermore, Mr. Shen noted, "The Company is working on an application to have its common stock listed on the Nasdaq Stock Market . As the stock exchange processes our application, the Board will determine whether we need to utilize the authority granted to us by the stockholders to effect a reverse split of our stock and the timing thereof." The following summary compares second quarter fiscal 2023 and the six months ended September 30, 2022 , to the same prior-year periods: Fiscal 2023 Second Quarter Consolidated Financial Results · Net sales were $8.5 million , an increase of $3.7 million , due to $2.3 million of added revenue from Stadco and $1.4 million of higher revenue at Ranor . · Cost of sales were $6.8 million , or $2.9 million higher, due primarily to additional cost of sales at Stadco . · Gross profit was $1.7 million , or $0.8 million higher when compared to the same quarter last year. Gross margin percentage was slightly higher because of a favorable production mix and strong throughput at Ranor . · SG&A was $1.8 million , an increase of $0.7 million , primarily due to the added Stadco SG&A, and increased spending for outside advisory services and travel related to the integration of Stadco's business. · Operating loss was $0.1 million , compared to operating loss of $0.2 million in the same quarter a year ago. Fiscal 2023 Six Months Ended September 30, 2022 , Consolidated Financial Results · Net sales were $15.6 million , an increase of $7.4 million , due to $4.7 million of added revenue from Stadco and $2.7 million of higher revenue at Ranor . · Cost of sales were $13.0 million , or $6.6 million higher, due primarily to additional cost of sales at Stadco . · Gross profit was $2.6 million , or $0.8 million higher when compared to the same period last year. Gross margin percentage was lower because of certain unprofitable projects and weak throughput at Stadco . · SG&A was $3.2 million , an increase of $1.3 million , primarily due to the added Stadco SG&A, and increased spending for outside advisory services and travel related to the integration of Stadco's business. · Operating loss was $0.6 million , compared to operating loss of $0.1 million in the same period a year ago. Financial Position On September 30, 2022 , TechPrecision had $0.2 million in cash and cash equivalents, a decrease since March 31, 2022 . Working capital was $3.3 million at March 31, 2022 compared to $2.8 million at March 31, 2022 . Total debt at September 30, 2022 and March 31, 2022 was $6.0 million and $7.4 million , respectively. In December 2022 , the Ranor term loan will mature, and the revolver loan will be up for renewal. The Company intends to renew the revolver loan and refinance the Ranor term loan, however, there can be no assurance that we will be successful in completing the renewal and refinance in a timely manner, or at all. 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," "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 change the composition of our revenues and effectively control operating expenses; external factors that may be outside our control, including the Russia - Ukraine conflict, price inflation, interest rates and supply chain inefficiencies; 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; 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; unexpected costs, charges or expenses resulting from the recently completed 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, 2022 . 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: 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 TECHPRECISION CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) September 30 , 2022 March 31 , 2022 ASSETS Current assets: Cash and cash equivalents $ 235,384 $ 1,052,139 Accounts receivable 2,040,420 3,009,249 Contract assets 9,220,084 8,350,231 Raw materials 1,173,280 874,538 Work-in-process 1,343,324 1,360,137 Other current assets 1,009,689 1,421,459 Total current assets 15,022,181 16,067,753 Property, plant and equipment, net 12,864,843 13,153,165 Right of use asset, net 6,054,676 6,383,615 Deferred income taxes 2,164,975 2,126,770 Other noncurrent assets, net 695,399 121,256 Total assets $ 36,802,074 $ 37,852,559 LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $ 3,699,475 $ 3,426,921 Accrued expenses 2,476,655 3,435,866 Contract liabilities 1,806,405 1,765,319 Current portion of long-term lease liability 672,900 593,808 Current portion of long-term debt 3,030,238 4,093,079 Total current liabilities 11,685,673 13,314,993 Long-term debt, net 2,863,808 3,114,936 Long-term lease liability 5,501,816 5,853,791 Other noncurrent liability 1,298,274 305,071 Total liabilities 21,349,571 22,588,791 Stockholders' Equity: Common stock - par value $.0001 per share, 90,000,000 shares authorized, shares issued and outstanding: September 30, 2022 - 34,443,959; March 31, 2022 - 34,307,450 3,444 3,430 Additional paid in capital 14,936,713 14,637,771 Retained earnings 512,346 622,567 Total stockholders' equity 15,452,503 15,263,768 Total liabilities and stockholders' equity $ 36,802,074 $ 37,852,559 TECHPRECISION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited) Three Months Ended September 30 , Six Months Ended September 30 , 2022 2021 2022 2021 Net sales $ 8,522,647 $ 4,797,410 $ 15,599,004 $ 8,209,639 Cost of sales 6,782,975 3,866,703 13,042,114 6,446,264 Gross profit 1,739,672 930,707 2,556,890 1,763,375 Selling, general and administrative 1,827,095 1,173,689 3,202,322 1,906,297 Loss from operations (87,423 ) (242,982 ) (645,432 ) (142,922 ) Other income 73,561 1,001 40,336 11,391 Interest expense (83,730 ) (56,894 ) (167,375 ) (86,772 ) PPP loan forgiveness -- -- -- 1,317,100 Refundable Employee retention tax credits 624,045 -- 624,045 -- Total other income (expense) 613,876 (55,893 ) 497,006 1,241,719 Income (loss) before income taxes 526,453 (298,875 ) (148,426 ) 1,098,797 Income tax expense (benefit) 135,509 (78,462 ) (38,205 ) (51,882 ) Net income (loss) $ 390,944 $ (220,413 ) $ (110,221 ) $ 1,150,679 Other comprehensive loss: Foreign currency translation adjustments $ -- $ (1,141 ) $ -- $ (1,099 ) Other comprehensive loss $ -- $ (1,141 ) $ -- $ (1,099 ) Comprehensive income (loss) $ 390,944 $ (221,554 ) $ (110,221 ) $ 1,149,580 Net income (loss) per share basic $ 0.01 $ (0.01 ) $ (0.00 ) $ 0.04 Net income (loss) per share diluted $ 0.01 $ (0.01 ) $ (0.00 ) $ 0.04 Weighted average shares outstanding - basic 34,338,040 31,359,941 34,322,828 30,424,216 Weighted average shares outstanding - diluted 35,992,780 31,359,941 34,322,828 32,026,262 TECHPRECISION CORPORATION NET SALES , COST OF SALES, GROSS PROFIT BY SEGMENT (unaudited) Three months ended September 30, 2022 Three months ended September 30, 2021 Changes (dollars in thousands) Amount Percent of Net sales Amount Percent of Net sales Amount Percent of Net sales Ranor $ 4,934 58 % $ 3,538 74 % $ 1,396 39 % Stadco 3,589 42 % 1,259 26 % 2,330 185 % Net sales $ 8,523 100 % $ 4,797 100 % $ 3,726 78 % Ranor $ 2,907 34 % $ 2,806 59 % $ 101 4 % Stadco 3,876 46 % 1,060 22 % 2,816 266 % Cost of sales $ 6,783 80 % $ 3,866 81 % $ 2,917 75 % Ranor $ 2,027 23 % $ 733 17 % $ 1,294 177 % Stadco (287 ) (3 ) % 198 2 % (485 ) (245) % Gross profit $ 1,740 20 % $ 931 19 % $ 809 87 % Six Months ended September 30, 2022 Six Months ended September 30, 2021 Changes (dollars in thousands) Amount Percent of Net sales Amount Percent of Net sales Amount Percent of Net sales Ranor $ 9,660 62 % $ 6,951 85 % $ 2,709 39 % Stadco 5,939 38 % 1,258 15 % 4,681 372 % Net sales $ 15,599 100 % $ 8,209 100 % $ 7,390 90 % Ranor $ 5,793 37 % $ 5,386 66 % $ 407 8 % Stadco 7,249 47 % 1,060 13 % 6,189 584 % Cost of sales $ 13,042 84 % $ 6,446 79 % $ 6,596 102 % Ranor $ 3,867 25 % $ 1,565 19 % $ 2,302 147 % Stadco (1,310 ) (8 ) % 198 2 % (1,508 ) (761 ) % Gross profit $ 2,557 16 % $ 1,763 21 % $ 794 45 % TECHPRECISION CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Six Months Ended September 30 , 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $ (110,221 ) $ 1,150,679 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 1,116,602 515,804 Amortization of debt issue costs 26,747 18,096 Stock based compensation expense 298,957 62,066 Change in contract loss provision (26,628 ) (100,497 ) Deferred income taxes (38,205 ) (51,882 ) PPP loan forgiveness -- (1,317,100 ) Change in fair value for contingent consideration 63,436 -- Changes in operating assets and liabilities: Accounts receivable 968,829 (794,235 ) Contract assets (869,853 ) 56,153 Work-in-process and raw materials (281,929 ) 505,814 Other current assets 411,770 141,765 Accounts payable 272,554 (403,159 ) Accrued expenses (1,243,082 ) (1,588,991 ) Contract liabilities 41,086 739,043 Other noncurrent liabilities 993,203 -- Net cash provided by (used in) operating activities 1,623,266 (1,066,444 ) CASH FLOWS FROM INVESTING ACTIVITIES: Business acquisition, net of cash acquired -- (7,795,810 ) Fixed asset deposit (574,143 ) -- Purchases of property, plant and equipment (499,341 ) (362,986 ) Net cash used in investing activities (1,073,484 ) (8,158,796 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from term loan -- 4,000,000 Closing costs related to common stock sale -- (335,419 ) Proceeds from sale of common stock -- 3,523,000 Debt issue costs (18,862 ) (109,532 ) Revolver loan payments and borrowings, net (1,012,002 ) 865,049 Payments of principal for leases (25,820 ) (475,440 ) Repayments of long-term debt (309,853 ) (91,781 ) Net cash (used in) provided by financing activities (1,366,537 ) 7,375,877 Effect of exchange rate on cash and cash equivalents -- (33 ) Net decrease in cash and cash equivalents (816,755 ) (1,849,396 ) Cash and cash equivalents, beginning of period 1,052,139 2,130,711 Cash and cash equivalents, end of period $ 235,384 $ 281,315 TECHPRECISION CORPORATION SUPPLEMENTAL INFORMATION 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) 2022 2021 Change 2022 2021 Change Net income (loss) $ 391 $ (220 ) $ 611 $ (110 ) $ 1,151 $ (1,261 ) Income tax expense (benefit) 136 (79 ) 215 (38 ) (52 ) 14 Interest expense (1) 84 57 27 167 87 80 Depreciation and amortization 532 333 199 1,117 516 601 EBITDA $ 1,143 $ 91 $ 1,052 $ 1,136 $ 1,702 $ (566 ) SOURCE: TechPrecision Corp. View source version on accesswire.com : https://www.accesswire.com/726702/TechPrecision-Corporation-Reports-Second-Quarter-Fiscal-2023-Financial-Results

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