TPCS - TechPrecision Corporation Reports Fourth Quarter and Fiscal Year 2023 Financial Results

June, 15 2023 04:05 PM Techprecision Corp

Ranor and Stadco segments drive revenue growth

WESTMINSTER, MA / ACCESSWIRE / June 15, 2023 / 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 fourth quarter and fiscal year 2023 ended March 31, 2023.

"Fiscal year 2023 consolidated net sales were $31.4 million, or $9.1 million and 41% higher when compared to $22.3 million in fiscal 2022," stated Alexander Shen, TechPrecision's Chief Executive Officer. "Our Ranor segment reported strong financial results with net sales of $19.2 million and gross profit of $7.0 million. Our Stadco subsidiary reported net sales of $12.2 million but incurred negative gross profit for the fiscal year."

"Fiscal year 2023 was a challenging period with the Stadco manufacturing rebuild," Mr. Shen continued. "New projects with associated startup activities presented certain production issues and intermittent equipment down-time that resulted in unfavorable throughput and under-absorbed overhead. We expect a gradual improvement in gross margin as current and new projects progress with less equipment down-time in future periods. Total consolidated backlog remained strong at $44.0 million as of March 31, 2023. We expect to deliver that backlog over the course of the next one to three fiscal years with revenue growth and gross margin expansion."

The following summary compares the three and twelve months ended March 31, 2023 to the same prior year periods:

Consolidated Financial Results - Fiscal 2023 Three Months Ended March 31, 2023

Net sales were $7.5 million, compared with net sales of $7.6 million in the same period a year ago.
Cost of sales were $6.7 million, or $0.2 million and 4% higher, due primarily to higher unabsorbed overhead.
Gross profit was $0.8 million, or $0.3 million lower when compared to the same quarter last year. Gross margin percentage was also lower primarily due to unabsorbed overhead at Stadco.
SG&A was $1.6 million, a year-over-year increase of 12% or $0.2 million.
Operating loss widened to $0.7 million, compared to operating loss of $0.3 million in the same quarter a year ago.

Consolidated Financial Results - Fiscal 2023 Twelve Months Ended March 31, 2023

Net sales were $31.4 million, an increase of $9.1 million or 41% when compared to fiscal 2022. A favorable project mix of repeat business at Ranor plus a full year of business activity at Stadco drove growth.
Cost of sales were $26.5 million, or 40% higher, due primarily to the increase at Stadco.
Gross profit was $4.9 million, or 45% higher when compared to the same period last year. Gross profit at Ranor more than doubled on a 32% revenue increase but was partially offset by losses at Stadco. Gross margin percentage was 15.6%, or just slightly above the prior year period.
SG&A was $6.0 million, an increase of $1.1 million, primarily due to the added Stadco SG&A. The same period a year ago only included 31 weeks of business activity at Stadco.
Operating loss narrowed to $1.1 million from operating loss of $1.6 million in the same period a year ago.

Financial Position

On March 31, 2023, TechPrecision had $0.5 million in cash and cash equivalents, a decrease since March 31, 2022. Working capital was $5.6 million at March 31, 2023 compared to $2.8 million at March 31, 2022 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 March 31, 2023 and March 31, 2022 was $6.1 million and $7.4 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, 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 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 Russia- Ukraine conflict, 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; 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)



March 31, 2023


March 31, 2022

ASSETS






Current assets:






Cash and cash equivalents

$
534,474


$
1,052,139

Accounts receivable


2,336,481



3,009,249

Contract assets


8,947,811



8,350,231

Raw materials


1,692,852



874,538

Work-in-process


719,736



1,360,137

Other current assets


348,983



1,421,459

Total current assets


14,580,337



16,067,753

Property, plant and equipment, net


13,914,024



13,153,165

Right of use asset, net


5,660,938



6,383,615

Deferred income taxes


1,931,186



2,126,770

Other noncurrent assets, net


121,256



121,256

Total assets

$
36,207,741


$
37,852,559

LIABILITIES AND STOCKHOLDERS' EQUITY:








Current liabilities:








Accounts payable

$
2,224,320


$
3,426,921

Accrued expenses


2,533,185



3,435,866

Contract liabilities


2,333,591



1,765,319

Current portion of long-term lease liability


711,727



593,808

Current portion of long-term debt


1,218,162



4,093,079

Total current liabilities


9,020,985



13,314,993

Long-term debt, net


4,749,139



3,114,936

Long-term lease liability


5,143,974



5,853,791

Other noncurrent liabilities


2,699,492



305,071

Total liabilities


21,613,590



22,588,791

Stockholders' Equity:








Common stock - par value $.0001 per share, 50,000,000 shares authorized, shares issued and outstanding: March 31, 2023 - 8,613,408; March 31, 2022 - 8,576,625


861



858

Additional paid in capital


14,949,729



14,640,343

Retained earnings (accumulated deficit)


(356,439
)


622,567

Total stockholders' equity


14,594,151



15,263,768

Total liabilities and stockholders' equity

$
36,207,741


$
37,852,559

TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)



Three Months Ended March 31,


Twelve Months Ended March 31,



2023


2022


2023


2022

Net sales

$
7,505,265


$
7,561,531


$
31,431,614


$
22,282,495

Cost of sales


6,657,381



6,426,407



26,527,953



18,905,938

Gross profit


847,884



1,135,124



4,903,661



3,376,557

Selling, general and administrative


1,581,987



1,407,907



6,008,881



4,938,086

Loss from operations


(734,103
)


(272,783
)


(1,105,220
)


(1,561,529
)
Other income (expense)


252



(41,775
)


40,842



(28,385
)
Interest expense


(94,630
)


(87,881
)


(355,608
)


(269,375
)
Refundable employee retention tax credits


12,519



--



636,564



--

PPP loan forgiveness


--



--



--



1,317,100

Total other (expense) income


(81,859
)


(129,656
)


321,798



1,019,340

Loss before income taxes


(815,962
)


(402,439
)


(783,422
)


(542,189
)
Income tax provision (benefit)


186,798



193,394



195,584



(192,355
)
Net loss

$
(1,002,760
)

$
(595,833
)

$
(979,006
)

$
(349,834
)
Other comprehensive loss:
















Foreign currency translation adjustments

$
--


$
(20,739
)

$
--


$
(1,909
)
Foreign currency translation reclassification

$
--


$
--


$
--


$
(19,929
)
Other comprehensive loss

$
--


$
(20,739
)

$
--


$
(21,838
)
Comprehensive loss

$
(1,002,760
)

$
(616,572
)

$
(979,006
)

$
(371,672
)
Net loss per share basic

$
(0.12
)

$
(0.07
)

$
(0.11
)

$
(0.04
)
Net loss per share diluted

$
(0.12
)

$
(0.07
)

$
(0.11
)

$
(0.04
)
Weighted average shares outstanding - basic


8,611,742



8,575,367



8,595,992



8,095,058

Weighted average shares outstanding - diluted


8,611,742



8,575,367



8,595,992



8,095,058

TECHPRECISION CORPORATION
NET SALES, COST OF SALES, GROSS PROFIT BY SEGMENT
(UNAUDITED)

Three months ended

March 31, 2023


March 31, 2022


Changes






Percent of





Percent of







(dollars in thousands)

Amount


Net sales


Amount


Net sales


Amount


Percent

Net Sales


















Ranor

$
4,786



64
%

$
4,839



64
%

$
(53
)


(1
)%
Stadco


2,719



36
%


2,776



37
%


(57
)


(2
)%
Intersegment elimination


--



--
%


(54
)


(1
)%


54



100
%
Consolidated Net Sales

$
7,505



100
%

$
7,561



100
%

$
(56
)


(1
)%
Cost of sales
























Ranor

$
3,356



45
%

$
3,261



43
%

$
95



3
%
Stadco


3,301



44
%


3,219



43
%


82



3
%
Inter-segment elimination


--







(54
)


(1
)%


54



100
%
Consolidated Cost of Sales

$
6,657



89
%

$
6,426



85
%

$
231



4
%
Gross profit
























Ranor

$
1,430



19
%

$
1,632



22
%

$
(202
)


(12
)%
Stadco


(582
)


(8
)%


(497
)


(7
)%


(85
)


(17
)%
Consolidated Gross Profit

$
848



11
%

$
1,135



15
%

$
(287
)


(25
)%

Twelve months ended

March 31, 2023


March 31, 2022


Changes






Percent of





Percent of







(dollars in thousands)

Amount


Net sales


Amount


Net sales


Amount


Percent

Net Sales


















Ranor

$
19,182



61
%

$
14,581



65
%

$
4,601



32
%
Stadco


12,250



39
%


7,756



35
%


4,494



58
%
Intersegment elimination


--



--
%


(54
)


-
%


54



100
%
Consolidated Net sales

$
31,432



100
%

$
22,283



100
%

$
9,149



41
%
Cost of Sales
























Ranor

$
12,205



39
%

$
11,131



50
%

$
1,074



10
%
Stadco


14,323



45
%


7,775



35
%


6,548



84
%
Consolidated Cost of Sales

$
26,528



84
%

$
18,906



85
%

$
7,622



40
%
Gross Profit
























Ranor

$
6,977



22
%

$
3,450



15
%

$
3,527



102
%
Stadco


(2,073
)


(6
)%


(73
)


--
%


(2,000
)

nm%

Consolidated Gross Profit

$
4,904



16
%

$
3,377



15
%

$
1,527



45
%

nm - not meaningful

TECHPRECISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED



Years Ended March 31,



2023


2022

CASH FLOWS FROM OPERATING ACTIVITIES






Net loss

$
(979,006
)

$
(349,834
)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:








Depreciation and amortization


2,217,472



1,460,439

Amortization of debt issue costs


59,916



48,251

Gain on disposal of equipment


(468
)


-

Stock based compensation expense


253,079



190,754

Change in contract loss provision


(237,318
)


(223,111
)
Deferred income taxes


195,584



(192,355
)
PPP loan forgiveness


--



(1,317,100
)
Stock based expense for contingent consideration


56,310





Change in fair value for contingent consideration


(63,436
)


50,454

Changes in operating assets and liabilities:








Accounts receivable


672,768



(842,943
)
Contract assets


(597,580
)


1,012,783

Work-in-process and raw materials


(177,914
)


(42,491
)
Other current assets


1,072,476



354,993

Other noncurrent liabilities


2,394,420



(50,633
)
Accounts payable


(1,202,601
)


245,743

Accrued expenses


(1,094,137
)


(1,477,552
)
Contract liabilities


568,273



1,390,441

Net cash provided by operating activities


3,137,838



257,839

CASH FLOWS FROM INVESTING ACTIVITIES








Business acquisition, net of cash acquired


--



(7,795,810
)
Purchases of property, plant, and equipment


(2,325,301
)


(939,004
)
Proceeds from sale of fixed assets


7,000



-

Net cash used in investing activities


(2,318,301
)


(8,734,814
)
CASH FLOWS FROM FINANCING ACTIVITIES








Proceeds from term loan


--



4,000,000

Closing costs related to common stock sale


--



(335,418
)
Proceeds from sale of common stock


--



3,523,000

Proceeds from revolver loan


10,885,150



4,612,002

Repayment of revolver loan


(11,522,152
)


(3,325,000
)
Debt issuance costs


(57,723
)


(169,884
)
Principal payments for leases


(36,572
)


(508,806
)
Repayment of long-term debt


(605,905
)


(397,490
)
Net cash (used in) provided by financing activities


(1,337,202
)


7,398,404

Net decrease in cash and cash equivalents


(517,665
)


(1,078,571
)
Cash and cash equivalents, beginning of period


1,052,139



2,130,711

Cash and cash equivalents, end of period

$
534,474


$
1,052,139

TECHPRECISION CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of EBITDA to Net Loss
(UNAUDITED)

The following table provides a reconciliation of EBITDA to net loss, the most directly comparable U.S. GAAP measure reported in our condensed consolidated financial statements for the following periods:



Three Months ended March 31,


Twelve Months ended March 31,

(dollars in thousands)

2023


2022


Change


2023


2022


Change

Net loss

$
(1,003
)

$
(596
)

$
(407
)

$
(979
)

$
(350
)

$
(629
)
Income tax expense (benefit)


187



193



(6
)


196



(192
)


388

Interest expense (1)


95



88



7



356



269



87

Depreciation and amortization


551



447



104



2,217



1,460



757

EBITDA

$
(170
)

$
132


$
(302
)

$
1,790


$
1,187


$
603