Company Reports Continued Profitability in Fiscal Year 2019
WESTMINSTER, MA / ACCESSWIRE / November 13, 2018 / TechPrecision Corporation 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, energy and precision industrial sectors, today reported financial results for the second quarter. Net income for the second quarter ended September 30, 2018 was $181,000 or $0.01 per share compared with net income of $368,000 or $0.01 per share in the same quarter a year ago.
"We returned to targeted levels of project activity at the end of the second quarter, primarily with certain projects that have longer build cycles," stated Alexander Shen, TechPrecision's Chief Executive Officer. "Gross margins reported for the fiscal 2019 second quarter and first six-month periods were 30% and 28%, respectively as increased production has resulted in lower amounts of unabsorbed overhead. Our net income was $181,000, a 10% improvement over first quarter net income. We expect to remain profitable over the next two quarters of fiscal year 2019 as we make progress to complete an increased number of projects."
The financial statements in this report for periods beginning after April 1, 2018 and all subsequent reports reflect the adoption of the Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), or ASC 606. Prior period amounts have not been restated and continue to be reported in accordance with the accounting standards in effect for those periods.
Second Quarter of Fiscal 2019 Financial Results
- Net sales were $3.6 million, a $1.0 million decrease when compared to $4.6 million in the same quarter a year ago. The second quarter of fiscal year 2019 included $1.4 million of revenue related to the adoption of ASC 606.
- Gross margins for the second quarter of fiscal 2019 and 2018 were 30% and 31%, respectively.
- Operating income was $344,000 or 10% as a percentage of net sales.
- Net income was $181,000, or $0.01 per share basic and diluted, compared to net income of $368,000 in the quarter a year ago, or $0.01 per share basic and diluted.
- EBITDA was $534,000 for the quarter ended September 30, 2018, compared to $894,000 for the quarter ended September 30, 2017. Please refer to the reconciliation of EBITDA (a non-GAAP measure) to net income (a GAAP measure) in this release.
Six Months Fiscal 2019 Financial Results
- Net sales were $7.7 million compared to $10.4 million in the same period a year ago. The first six months of fiscal year 2019 included $3.8 million of revenue related to the adoption of ASC 606.
- Gross margins for the comparable six-month periods in fiscal 2019 and fiscal 2018 were 28% and 30%, respectively. Gross profit was $2.1 million compared to $3.2 million in the same period last year.
- Operating income was $666,000 or 8.6% as a percentage of net sales.
- Net income was $345,000, or $0.01 per share basic and diluted, compared to net income of $793,000 in the same period a year ago, or $0.03 per share basic and diluted.
- EBITDA was $1,045,000 for the six months ended September 30, 2018, compared to $1,886,000 for the six months ended September 30, 2017. Please refer to the reconciliation of EBITDA (a non-GAAP measure) to net income (a GAAP measure) in this release.
At September 30, 2018, TechPrecision had $1.4 million in cash, and working capital of $5.3 million compared to $2.7 million in cash and working capital of $4.9 million at March 31, 2018.
Teleconference Information
The Company will hold a conference call at 4:30 p.m. Eastern (U.S.) time on November 13, 2018. 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 TechPrecision.
A replay will be available until December 13, 2018. To access the replay, dial 1-877-481-4010 or 1-919-882-2331. When prompted, enter Conference Passcode 40388. 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/event/40388.
About TechPrecision Corporation
TechPrecision Corporation, through its wholly owned subsidiary, Ranor, Inc., 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," "will," "should," "would" and similar expressions 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 implied in 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: 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 reduce operating expenses, 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, operating in a single geographic location, 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 economic conditions, industry and market conditions and growth rates 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.
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
| | September 30, 2018 | March 31, 2018 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,401,238 | $ | 2,689,110 | ||||
| Accounts receivable, net | 817,744 | 1,446,982 | ||||||
| Contract assets | 5,557,489 | 347,896 | ||||||
| Inventories | 2,119,496 | 2,088,485 | ||||||
| Other current assets | 430,616 | 450,540 | ||||||
| Total current assets | 10,326,583 | 7,023,013 | ||||||
| Property, plant and equipment, net | 5,058,536 | 5,202,448 | ||||||
| Deferred income taxes | 2,346,141 | 2,046,298 | ||||||
| Other noncurrent assets, net | 2,116 | 6,860 | ||||||
| Total assets | $ | 17,733,376 | $ | 14,278,619 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,031,438 | $ | 345,705 | ||||
| Accrued expenses | 787,676 | 788,084 | ||||||
| Contract liabilities | 2,393,881 | 180,706 | ||||||
| Current portion of long-term debt | 791,920 | 766,354 | ||||||
| Total current liabilities | 5,004,915 | 2,080,849 | ||||||
| Long-term debt, including capital leases | 3,807,487 | 4,185,274 | ||||||
| | ||||||||
| Stockholders' Equity: | ||||||||
| Common stock - par value $.0001 per share, 90,000,000 shares authorized, 28,824,593 shares issued and outstanding at September 30 and March 31, 2018 | 2,882 | 2,882 | ||||||
| Additional paid in capital | 8,658,513 | 8,561,995 | ||||||
| Accumulated other comprehensive income | 21,816 | 24,236 | ||||||
| Retained earnings (accumulated deficit) | 237,763 | (576,617 | ) | |||||
| Total stockholders' equity | 8,920,974 | 8,012,496 | ||||||
| Total liabilities and stockholders' equity | $ | 17,733,376 | $ | 14,278,619 | ||||
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited)
| | Three Months Ended September 30, | Six Months Ended September 30, | ||||||||||||||
| | 2018 | 2017 | 2018 | 2017 | ||||||||||||
| Net sales | $ | 3,621,185 | $ | 4,588,894 | $ | 7,720,008 | $ | 10,419,280 | ||||||||
| Cost of sales | 2,526,085 | 3,155,893 | 5,572,384 | 7,245,692 | ||||||||||||
| Gross profit | 1,095,100 | 1,433,001 | 2,147,624 | 3,173,588 | ||||||||||||
| Selling, general and administrative | 751,037 | 720,341 | 1,481,502 | 1,640,100 | ||||||||||||
| Income from operations | 344,063 | 712,660 | 666,122 | 1,533,488 | ||||||||||||
| Other income | 4,275 | 1,456 | 7,015 | 1,547 | ||||||||||||
| Interest expense | (90,249 | ) | (100,414 | ) | (185,634 | ) | (209,196 | ) | ||||||||
| Total other expense, net | (85,974 | ) | (98,958 | ) | (178,619 | ) | (207,649 | ) | ||||||||
| Income before income taxes | 258,089 | 613,702 | 487,503 | 1,325,839 | ||||||||||||
| Income tax expense | 77,374 | 245,516 | 142,403 | 533,151 | ||||||||||||
| Net income | $ | 180,715 | $ | 368,186 | $ | 345,100 | $ | 792,688 | ||||||||
| Other comprehensive income (loss), before tax: | ||||||||||||||||
| Foreign currency translation adjustments | $ | (509 | ) | $ | 1,854 | $ | (2,420 | ) | $ | 2,586 | ||||||
| Other comprehensive income (loss), before tax | (509 | ) | 1,854 | (2,420 | ) | 2,586 | ||||||||||
| Income tax expense on other comprehensive income | -- | 746 | -- | 1,042 | ||||||||||||
| Other comprehensive income (loss), net of tax | $ | (509 | ) | $ | 1,108 | $ | (2,420 | ) | $ | 1,544 | ||||||
| Comprehensive income | $ | 180,206 | $ | 369,294 | $ | 342,680 | $ | 794,232 | ||||||||
| Net income per share basic | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.03 | ||||||||
| Net income per share diluted | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.03 | ||||||||
| Weighted average number of shares outstanding: Basic | 28,824,593 | 28,824,593 | 28,824,593 | 28,824,593 | ||||||||||||
| Diluted | 30,150,485 | 29,730,456 | 30,054,055 | 29,751,219 | ||||||||||||
TECHPRECISION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
| | Six Months Ended September 30, | |||||||
| | 2018 | 2017 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 345,100 | $ | 792,688 | ||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation | 372,060 | 351,422 | ||||||
| Amortization of debt issue costs | 29,846 | 37,038 | ||||||
| Stock based compensation expense | 96,518 | 150,697 | ||||||
| Change in contract loss provision | 15,255 | 29,139 | ||||||
| Deferred income taxes | 142,403 | 507,376 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 629,238 | (305,150 | ) | |||||
| Inventories | (1,142,803 | ) | (1,175,103 | ) | ||||
| Contract assets | (3,501,075 | ) | -- | |||||
| Other current assets | 19,924 | (124,537 | ) | |||||
| Other noncurrent assets and liabilities | -- | (9,678 | ) | |||||
| Accounts payable | 685,733 | 15,010 | ||||||
| Accrued expenses | 121,343 | 88,319 | ||||||
| Contract liabilities | 1,503,079 | 184,742 | ||||||
| Net cash (used in) provided by operating activities | (683,379 | ) | 541,963 | |||||
| | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property, plant and equipment | (228,148 | ) | (808,386 | ) | ||||
| Deposit for fixed assets | -- | (36,987 | ) | |||||
| Proceeds from sale of equipment | -- | 80,000 | ||||||
| Net cash used in investing activities | (228,148 | ) | (765,373 | ) | ||||
| | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Repayment of long-term debt | (377,323 | ) | (352,509 | ) | ||||
| Net cash used in financing activities | (377,323 | ) | (352,509 | ) | ||||
| Effect of exchange rate on cash and cash equivalents | 978 | (611 | ) | |||||
| Net decrease in cash and cash equivalents | (1,287,872 | ) | (576,530 | ) | ||||
| Cash and cash equivalents, beginning of period | 2,689,110 | 3,066,156 | ||||||
| Cash and cash equivalents, end of period | $ | 1,401,238 | $ | 2,489,626 | ||||
| | ||||||||
| SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION | ||||||||
| Cash paid during the year for: | ||||||||
| Interest expense | $ | 155,787 | $ | 185,415 | ||||
| Income taxes | $ | -- | $ | 30,000 | ||||
TECHPRECISION CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of EBITDA to Net Income
Earnings before interest, taxes, and depreciation and amortization, or EBITDA, is a non-GAAP measure. The following table provides a reconciliation of EBITDA to net income, the most directly comparable U.S. GAAP measure reported in our condensed consolidated financial statements:
| | Three months ended September 30, | Six months ended September 30, | ||||||||||||||||||||||
| (dollars in thousands) | 2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||||||||
| Net income | $ | 181 | $ | 368 | $ | (187 | ) | $ | 345 | $ | 793 | $ | (448 | ) | ||||||||||
| Income tax expense | $ | 77 | $ | 246 | $ | (169 | ) | $ | 142 | $ | 533 | $ | (391 | ) | ||||||||||
| Interest expense (a) | $ | 90 | $ | 100 | $ | (10 | ) | $ | 186 | $ | 209 | $ | (23 | ) | ||||||||||
| Depreciation | $ | 186 | $ | 180 | $ | 6 | $ | 372 | $ | 351 | $ | 21 | ||||||||||||
| EBITDA | $ | 534 | $ | 894 | $ | (360 | ) | $ | 1,045 | $ | 1,886 | $ | (841 | ) | ||||||||||
(a) includes amortization of debt issue costs
CONTACT:
Company Contact:
Mr. Thomas Sammons
Chief Financial Officer
TechPrecision Corporation
Phone: 978-883-5109
Email: sammonst@ranor.com
Website: www.techprecision.com
Investor Relations Contact:
HaydenIR
Brett Maas
Phone: 646-536-7331
Email: brett@haydenir.com
Website: www.haydenir.com
SOURCE: TechPrecision Corporation
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