TechPrecision Corporation Reports Third Quarter Fiscal 2023 Financial Results

About this update from Techprecision Corporation

Improving operating performance drives revenue growth and gross profit WESTMINSTER, MA / ACCESSWIRE / February 14, 2023 / 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 third quarter of fiscal year 2023 ended December 31, 2022 . "Third quarter consolidated net sales were $8.3 million or 28% higher when compared to $6.5 million in same quarter a year ago," stated Alexander Shen , TechPrecision's Chief Executive Officer. "Our Ranor segment reported a strong third quarter with net sales of $4.7 million and gross profit of $1.7 million . Our third quarter net sales included $3.6 million from our Stadco subsidiary. Gross profit and gross margin also significantly improved year-over-year for both the quarter and year-to-date periods." "We continue to make progress rebuilding Stadco manufacturing and throughput," Mr. Shen continued. "We will continue at Stadco 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 $43.9 million as of December 31, 2022 . We expect to deliver that backlog over the course of the next one to three fiscal years with revenue growth and gross margin expansion." As to our applications to uplist to NASDAQ and for the reverse split, both have been filed and are pending with the appropriate entities, although there can be no assurance that our listing application with NASDAQ and our authorization to effect the reverse stock split will be approved by the appropriate entities in a timely manner or at all. The following summary compares the three and nine months ended December 31, 2022 to the same prior year periods: Fiscal 2023 Third Quarter Consolidated Financial Results Net sales were $8.3 million , an increase of 28%, due to strong revenue growth at Ranor . Cost of sales were $6.8 million , or 13% higher, due primarily to increased net sales at Ranor and higher unabsorbed overhead at Stadco . Gross profit was $1.5 million , or $1.0 million higher when compared to the same quarter last year. Gross margin percentage was higher primarily due to a profitable project mix and strong throughput at Ranor . SG&A was $1.2 million , a year-over-year decrease of $0.4 million . Prior period SG&A included one-time costs for legal, accounting, and other outside advisory services related to the Stadco acquisition. Operating income was $0.3 million , compared to operating loss of $1.1 million in the same quarter a year ago. Fiscal 2023 Nine Months Ended December 31, 2022 Consolidated Financial Results Net sales were $23.9 million , an increase of $9.2 million or 63% when compared to the same nine-month period in the prior year. A profitable project mix of repeat business at Ranor plus twenty-one weeks of additional activity at Stadco were the drivers behind the revenue growth. Cost of sales were $19.9 million , or 59% higher, due to the increase in net sales for both Ranor and Stadco . Gross profit was $4.1 million , or 81% higher when compared to the same period last year. Gross margin percentage was higher because of a profitable production mix and better operating throughput. SG&A was $4.4 million , an increase of $0.9 million , primarily due to the added Stadco SG&A. The same period a year ago only included eighteen weeks of business activity at Stadco . Operating loss was $0.4 million , compared to operating loss of $1.3 million in the same period a year ago. Financial Position On December 31, 2022 , TechPrecision had $0.3 million in cash and cash equivalents, a decrease since March 31, 2021 . Working capital was $7.2 million at December 31, 2022 compared to $2.8 million at March 31, 2021 as we extended the Ranor term loan for an additional five years in December and converted a significant current liability to long-term. Total debt at December 31, 2022 and March 31, 2022 was $7.1 million and $7.4 million , respectively. In December 2022 , our revolver loan was renewed for one year. 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 COVID-19 pandemic, the Russia - Ukraine conflict, price inflation, interest rate increases 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; our failure to maintain effective internal controls over financial reporting; 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 ). 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 , 2022 March 31 , 2022 ASSETS Current assets: Cash and cash equivalents $ 316,185 $ 1,052,139 Accounts receivable 2,927,407 3,009,249 Contract assets 9,356,242 8,350,231 Raw materials 1,271,558 874,538 Work-in-process 1,020,566 1,360,137 Other current assets 986,024 1,421,459 Total current assets 15,877,982 16,067,753 Property, plant and equipment, net 12,640,077 13,153,165 Right of use asset, net 6,043,056 6,383,615 Deferred income taxes 2,117,985 2,126,770 Other noncurrent assets, net 726,456 121,256 Total assets $ 37,405,556 $ 37,852,559 LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable $ 1,489,972 $ 3,426,921 Accrued expenses 2,443,285 3,435,866 Contract liabilities 1,905,262 1,765,319 Current portion of long-term lease liability 727,803 593,808 Current portion of long-term debt 2,069,859 4,093,079 Total current liabilities 8,636,181 13,314,993 Long-term debt, net 4,863,602 3,114,936 Long-term lease liability 5,481,895 5,853,791 Other noncurrent liabilities 2,828,737 305,071 Total liabilities 21,810,415 22,588,791 Commitments and contingencies - see Note 15 Stockholders' Equity: Common stock - par value $.0001 per share, 90,000,000 shares authorized, sharesissued and outstanding: December 31, 2022 - 34,443,959; March 31, 2022 - 34,307,450 3,444 3,430 Additional paid in capital 14,945,376 14,637,771 Retained earnings 646,321 622,567 Total stockholders' equity 15,595,141 15,263,768 Total liabilities and stockholders' equity $ 37,405,556 $ 37,852,559 TECHPRECISION CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (unaudited) Three Months Ended December 31 , Nine Months Ended December 31 , 2022 2021 2022 2021 Net sales $ 8,327,345 $ 6,511,325 $ 23,926,349 $ 14,720,964 Cost of sales 6,828,458 6,033,267 19,870,572 12,479,531 Gross profit 1,498,887 478,058 4,055,777 2,241,433 Selling, general and administrative 1,224,572 1,623,883 4,426,894 3,530,179 Income (loss) from operations 274,315 (1,145,825 ) (371,117 ) (1,288,746 ) Other income 254 1,999 40,590 13,390 Interest expense (93,603 ) (94,721 ) (260,978 ) (181,494 ) PPP loan forgiveness -- -- -- 1,317,100 Refundable employee retention tax credits -- -- 624,045 -- Total other (expense) income (93,349 ) (92,722 ) 403,657 1,148,996 Income (loss) before income taxes 180,966 (1,238,547 ) 32,540 (139,750 ) Income tax expense (benefit) 46,991 (333,867 ) 8,786 (385,749 ) Net income (loss) $ 133,975 $ (904,680 ) $ 23,754 $ 245,999 Other comprehensive loss: Foreign currency translation adjustments $ -- $ (810 ) $ -- $ (1,909 ) Other comprehensive loss $ -- $ (810 ) $ -- $ (1,909 ) Comprehensive income (loss) $ 133,975 $ (905,490 ) $ 23,754 $ 244,090 Net income (loss) per share basic $ 0.00 $ (0.03 ) $ 0.00 $ 0.01 Net income (loss) per share diluted $ 0.00 $ (0.03 ) $ 0.00 $ 0.01 Weighted average shares outstanding - basic 34,443,959 34,286,580 34,363,352 31,716,353 Weighted average shares outstanding - diluted 36,134,709 34,286,580 36,039,468 33,395,123 TECHPRECISION CORPORATION NET SALES , COST OF SALES, GROSS PROFIT BY SEGMENT (unaudited) Three Months ended December 31, 2022 Three Months ended December 31, 2021 Changes (dollars in thousands) Amount Percent of net sales Amount Percent of net sales Amount Percent Ranor $ 4,735 57 % $ 2,790 43 % $ 1,945 70 % Stadco 3,592 43 % 3,721 57 % (129 ) (3 )% Net sales $ 8,327 100 % $ 6,511 100 % $ 1,816 28 % Ranor $ 3,056 37 % $ 2,538 39 % $ 518 20 % Stadco 3,773 45 % 3,495 54 % 278 8 % Cost of sales $ 6,828 82 % $ 6,033 93 % $ 795 13 % Ranor $ 1,680 20 % $ 199 3 % $ 1,481 744 % Stadco (181 ) (2 )% 279 4 % (460 ) (165 )% Gross profit $ 1,499 18 % $ 478 7 % $ 1,021 214 % Nine Months ended December 31, 2022 Nine Months ended December 31, 2021 Changes (dollars in thousands) Amount Percent of net sales Amount Percent of net sales Amount Percent Ranor $ 14,395 60 % $ 9,741 66 % $ 4,654 48 % Stadco 9,531 40 % 4,980 34 % 4,551 91 % Net sales $ 23,926 100 % $ 14,721 100 % $ 9,205 63 % Ranor $ 8,849 37 % $ 7,924 54 % $ 925 12 % Stadco 11,022 46 % 4,556 31 % 6,466 142 % Cost of sales $ 19,871 83 % $ 12,480 85 % $ 7,391 59 % Ranor $ 5,546 23 % $ 1,764 12 % $ 3,782 214 % Stadco (1,491 ) (6 )% 477 3 % (1,968 ) nm % Gross profit $ 4,055 17 % $ 2,241 15 % $ 1,814 81 % TECHPRECISION CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended December 31 , 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 23,754 $ 245,999 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,666,741 978,517 Amortization of debt issue costs 39,961 34,588 Stock based compensation expense 307,619 141,176 Change in contract loss provision 100,880 (66,232 Deferred income taxes 8,785 (386,413 PPP loan forgiveness -- (1,317,100 ) Change in fair value for contingent consideration 63,436 -- Gain on sale of fixed asset (468 ) -- Changes in operating assets and liabilities: Accounts receivable 81,842 (575,181 ) Contract assets (1,006,010 ) (871,339 ) Work-in-process and raw materials (57,450 ) 477,936 Other current assets 435,435 215,334 Other noncurrent assets -- (50,633 ) Accounts payable (166,749 ) (611,045 ) Accrued expenses (1,741,606 ) (1,282,269 ) Contract liabilities 139,944 1,418,010 Other noncurrent liabilities 974,737 -- Net cash provided by (used in) operating activities 870,851 (1,648,652 ) CASH FLOWS FROM INVESTING ACTIVITIES: Business acquisition, net of cash acquired -- (7,795,810 ) Proceeds from sale of fixed assets 7,000 -- Fixed asset deposit (605,200 ) -- Purchases of property, plant, and equipment (663,033 ) (436,531 ) Net cash used in investing activities (1,261,233 ) (8,232,341 ) 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 (43,945 ) (116,511 ) Revolver loan payments and borrowings, net 187,998 1,978,221 Payments of principal for leases (31,058 ) (493,015 ) Repayments of long-term debt (458,567 ) (243,510 ) Net cash (used in) provided by financing activities (345,572 ) 8,312,766 Effect of exchange rate on cash and cash equivalents -- (25 ) Net decrease in cash and cash equivalents (735,954 ) (1,568,252 ) Cash and cash equivalents, beginning of period 1,052,139 2,130,711 Cash and cash equivalents, end of period $ 316,185 $ 562,459 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 December 31 , Nine Months ended December 31 , (dollars in thousands) 2022 2021 Change 2022 2021 Change Net income (loss) $ 134 $ (905 ) $ 1,039 $ 24 $ 246 $ (222 ) Income tax expense (benefit) 47 (334 ) 381 9 (386 ) 395 Interest expense (1) 94 95 (1 ) 261 181 80 Depreciation and amortization 550 463 87 1,667 979 688 EBITDA $ 825 $ (681 ) $ 1,506 $ 1,961 $ 1,020 $ 941 (1) Includes amortization of debt issue costs. 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 Corp. View source version on accesswire.com : https://www.accesswire.com/739323/TechPrecision-Corporation-Reports-Third-Quarter-Fiscal-2023-Financial-Results

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