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
Fiscal 2023 Nine Months Ended December 31, 2022 Consolidated Financial Results
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, shares issued 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: This email address is being protected from spambots. You need JavaScript enabled to view it. | |
| Email: This email address is being protected from spambots. You need JavaScript enabled to view it. | Website: www.haydenir.com | |
| Website: www.techprecision.com |
| Last Trade: | US$3.69 |
| Daily Change: | 0.04 1.10 |
| Daily Volume: | 9,508 |
| Market Cap: | US$35.500M |
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