SOURCE: TechPrecision Corporation

TechPrecision Corporation

August 17, 2015 16:00 ET

TechPrecision Corporation Reports First Quarter 2016 Financial Results

WAYNE, PA--(Marketwired - Aug 17, 2015) -  TechPrecision Corporation (OTCQB: TPCS) ("TechPrecision" or "the Company"), an industry leading global manufacturer of precision, large-scale fabricated and machined metal components and tested systems with customers in the defense, energy and precision industrial sectors, today reported financial results for the first quarter of fiscal year 2016, the period ended June 30, 2015.

First Quarter Recap
"Opening the first quarter of fiscal year 2016 with net profit is certainly a significant achievement for all of us. This is the first profitable quarter the Company has reported since June 30, 2011 and the first profitable quarter since I joined the Company back in late June, 2014. We achieved this result with our consistent sharp focus on productivity initiatives, resource realignment, and top line growth with key customers. We improved profitability on a sales volume that was 30% lower than the same period last fiscal year. We ended the first quarter of fiscal year 2016 with a 39% decrease in selling, general, and administrative expense, and a positive gross margin of 29% compared to 3.5% for Q1 FY15," stated Alexander Shen, TechPrecision's Chief Executive Officer.

"Moving forward, we intend to maintain the sharp focus that got us to this point of our recovery. We plan to increase our backlog and focus on new business contracts which utilize our core competencies in custom, large scale, high precision fabrication and machining, with our core customers, which leverage our established expertise, certifications, and qualifications in the defense, nuclear, and precision industrial sectors. We must continue to execute and maintain operational run rate improvements to improve gross margins, and increase the amount of cash generated from operations."

First Fiscal Quarter 2016 Summary: Three Months Ended June 30

  • Net sales decreased 30% or $1.9 million to $4.4 million down from $6.2 million in the year-ago quarter but increased 12% from $3.9 million in revenues sequentially from fiscal Q4 of 2015. 
  • Cost of sales decreased 49% or $2.9 million to $3.1 million compared to $6.0 million in the year ago quarter. In the prior year, $0.4 million of contract losses were recorded in the quarter ended June 30, 2014. Additionally, a significant portion of the production completed during Q1 of last year was related to loss contracts for which contract loss reserves were established in Q4 of fiscal 2014. These two dynamics negatively impacted and together suppressed gross margins in the prior year's first quarter. 
  • Gross profit in the first quarter of fiscal 2016 was $1.3 million or a 29% gross margin as compared to a gross profit of $0.2 million or gross margin of 3.5% in the same quarter one year ago. Contract losses recognized during Q4 of fiscal 2014 and Q1 of fiscal 2015 negatively impacted gross profit during the first quarter of fiscal 2015. 
  • The Company continues to pursue efforts to recover significant portions of the contract losses recorded within the fourth quarter of fiscal 2014 and the first quarter of fiscal 2015.
  • Selling, general and administrative expenses decreased by approximately 39%, or $0.5 million, to $0.8 million from $1.3 million in the same quarter last year and sequentially decreased by 38% from $1.3 million for the fourth quarter of fiscal 2015.
  • The net income was $0.2 million for the first quarter compared to a net loss of $1.3 million in the prior year first quarter and compared sequentially to a net loss of $0.7 million in the fourth quarter of fiscal 2015.

Balance Sheet Summary
At June 30, 2015, TechPrecision had negative working capital of $1.9 million as compared with negative working capital of $2.0 million at March 31, 2015. Current liabilities at June 30, 2015 included $2.2 million of short-term debt obligations which the Company is currently looking to refinance on a long-term basis. As of June 30, 2015, the Company had $1.5 million in cash and cash equivalents compared to $1.3 million at March 31, 2015.

Teleconference Information
The Company will hold a conference call at 4:30 p.m. Eastern (U.S.) time on Monday, August 17, 2015. To participate in the live conference call, please dial 1-877-407-8133 five to 10 minutes prior to the scheduled conference call time. International callers should dial 1-201-689-8040. When prompted, reference Conference Passcode 13617492.

A replay will be available for one month starting on Monday, August 17, 2015. To access the replay, dial 1-877-660-6853 or 1-201-612-7415. When prompted, enter Conference Passcode 13617492.

The call will also be available live by webcast at TechPrecision Corporation's website, www.techprecision.com, and will also be available over the Internet and accessible at http://www.investorcalendar.com/IC/CEPage.asp?ID=174279.

About TechPrecision Corporation
TechPrecision Corporation, through its wholly owned subsidiaries, Ranor, Inc., and Wuxi Critical Mechanical Components Co., Ltd., globally manufactures large-scale, metal fabricated and machined precision components and equipment. These products are used in a variety of markets including: alternative energy (Solar and Wind), medical, nuclear, defense, industrial, and aerospace to name a few. TechPrecision's goal is to be an end-to-end global service provider to its customers by furnishing customized and integrated "turn-key" 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. These forward looking statements are often identified by the use of forward-looking terminology such as "believes," expects" or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including recurring operating losses and the availability of appropriate financing facilities impacting our ability to continue as a going concern, to change the composition of our revenues and effectively reduce operating expenses, the Company's ability to generate business from long-term contracts rather than individual purchase orders, its dependence upon a limited number of customers, its ability to successfully bid on projects, 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). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.

 
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
    Three Months Ended June 30,  
    2015     2014  
Net sales   $ 4,374,975     $ 6,230,341  
Cost of sales     3,092,116       6,012,101  
Gross profit     1,282,859       218,240  
Selling, general and administrative     804,207       1,328,773  
Income (loss) from operations     478,652       (1,110,533 )
  Other (expense) income     (189 )     53  
  Interest expense     (272,122 )     (160,589 )
  Interest income     10       --  
Total other expense, net     (272,301 )     (160,536 )
Income (loss) before income taxes     206,351       (1,271,069 )
Income tax expense     --       --  
Net income (loss)   $ 206,351     $ (1,271,069 )
Net loss per share (basic)   $ 0.01     $ (0.05 )
Net loss per share (diluted)   $ 0.01     $ (0.05 )
Weighted average number of shares outstanding (basic)     24,867,019       24,010,264  
Weighted average number of shares outstanding (diluted)     24,867,019       24,010,264  
 
 
 
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
 
    June 30, 2015
(Unaudited)
    March 31,
2015
 
ASSETS            
Current assets:            
Cash and cash equivalents   $ 1,464,760     $ 1,336,325  
Accounts receivable, less allowance for doubtful accounts of $24,693 in 2016 and 2015     821,639       826,363  
Costs incurred on uncompleted contracts, in excess of progress billings     1,800,489       2,008,244  
Inventories- raw materials     135,771       134,812  
Current deferred taxes     826,697       826,697  
Other current assets     465,816       538,253  
  Total current assets     5,515,172       5,670,694  
Property, plant and equipment, net     5,430,345       5,610,041  
Other noncurrent assets, net     27,155       45,490  
  Total assets   $ 10,972,672     $ 11,326,225  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY:                
Current liabilities:                
Accounts payable   $ 1,203,675     $ 1,526,123  
Trade notes payable     74,401       138,237  
Accrued expenses     1,700,092       1,665,658  
Advanced claims payment     507,835       --  
Deferred revenues     714,551       1,211,506  
Short-term debt     2,250,000       2,250,000  
Current portion of long-term debt     933,823       933,651  
  Total current liabilities     7,384,377       7,725,175  
Long-term debt, including capital leases     2,252,337       2,485,858  
Noncurrent deferred taxes     826,697       826,697  
                 
Stockholders' Equity:                
Preferred stock - par value $.0001 per share, 10,000,000 shares authorized, of which 9,890,980 are designated as Series A Preferred Stock, with 1,333,697 and 1,927,508 shares issued and outstanding at June 30, 2015 and March 31, 2015, respectively (liquidation preference: $380,104 - June 30, 2015; $549,340 - March 31, 2015)     394,758       524,210  
Common stock - par value $.0001 per share, 90,000,000 shares authorized, 25,446,187 and 24,669,958 shares issued and outstanding at June 30, 2015, and at March 31, 2015, respectively     2,545       2,467  
Additional paid in capital     6,630,920       6,487,589  
Accumulated other comprehensive income     24,019       23,561  
Accumulated deficit     (6,542,981 )     (6,749,332 )
  Total stockholders' equity     509,261       288,495  
  Total liabilities and stockholders' equity   $ 10,972,672     $ 11,326,225  
 
 
 
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
    Three Months Ended June 30,  
    2015     2014  
CASH FLOWS FROM OPERATING ACTIVITIES            
Net income (loss)   $ 206,351     $ (1,271,069 )
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:                
Depreciation and amortization     276,917       255,645  
Stock based compensation expense     13,957       68,824  
Provision for contract losses     20,371       366,951  
Changes in operating assets and liabilities:                
Accounts receivable     4,724       (940,242 )
Costs incurred on uncompleted contracts, in excess of progress billings     207,755       561,964  
Inventories - raw materials     (959 )     51,153  
Other current assets     11,074       4,001  
Other noncurrent assets     --       (335,226 )
Accounts payable     (386,285 )     921,933  
Accrued expenses     14,520       (431,784 )
Advanced claims payment     507,835       --  
Deferred revenues     (496,955 )     (809,766 )
  Net cash provided by (used in) operating activities     379,309       (1,557,616 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES                
Purchases of property, plant and equipment     (17,600 )     (54,093 )
  Net cash used in investing activities     (17,600 )     (54,093 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES                
Borrowings of long-term debt     --       4,150,000  
Repayment of long-term debt     (233,349 )     (2,738,105 )
  Net cash (used in) provided by financing activities     (233,349 )     1,411,895  
Effect of exchange rate on cash and cash equivalents     75       1  
Net increase (decrease) in cash and cash equivalents     128,435       (199,813 )
Cash and cash equivalents, beginning of period   $ 1,336,325     $ 1,086,701  
Cash and cash equivalents, end of period   $ 1,464,760     $ 886,888  
                 

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