Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TECHPRECISION CORP | tv485473_8k.htm |
Exhibit 99.1
| 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: brett@haydenir.com |
| Email: sammonst@ranor.com | Website: www.haydenir.com |
| Website: www.techprecision.com |
FOR IMMEDIATE RELEASE
TechPrecision Corporation Reports Financial Results for the Third Fiscal Quarter of 2018
Westminster, MA – February 13, 2018 – 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, energy and precision industrial sectors, today reported financial results for the third quarter and the nine months ended December 31, 2017. Net sales for the three months ended December 31, 2017 were $3.6 million, a 32% decrease when compared to the same quarter a year ago. Net sales for the nine months ended December 31, 2017 were $14.1 million, a 3% increase when compared to the same period a year ago. Sales order backlog at December 31, 2017 was $11.2 million compared with backlog of $15.8 million at March 31, 2017.
Summary and Outlook
“Our third quarter results were impacted by two factors: first, defense customer appropriations and funding delays resulted in lower order volume, and second, a higher mix of lower margin shipments,” stated Alexander Shen, TechPrecision’s Chief Executive Officer. “We expect a strong pipeline of business ahead, once the appropriations and funding delays are resolved. As of today, we have in place certain agreements which release funding for materials acquisition in advance of new orders to build components for a number of our key customers.”
Third Quarter of Fiscal 2018 Financial Results
| · | Net sales were $3.6 million, a $1.7 million decrease when compared to the same quarter a year ago. |
| · | Gross profit was $423,000 compared to $2.1 million in the same quarter last year, a 79% decrease, primarily on a higher volume of low margin sales mix and under absorbed overhead from a slowdown in project activity, caused by defense customer funding delays. |
| · | Operating loss was $174,000 compared to operating income of $1.2 million in the same period a year ago. |
| · | Net loss was $691,000, or $0.02 per diluted share, compared to net income of $992,000, or $0.03 per diluted share, in the year-ago quarter. |
Nine Months Year-to-Date Fiscal 2018 Financial Results
| · | Net sales were $14.1 million, a 3% increase when compared to the same period a year ago. |
| · | Gross profit was $3.6 million, a 29% decrease compared to $5.1 million in the same period a year ago, primarily due to a higher volume of low margin sales mix and under absorbed overhead. |
| · | Operating income was $1.4 million, compared to operating income of $2.6 million in the same period a year ago. |
| · | Net income was $101,000, or $0.00 per diluted share, compared to net income of $2.0 million, or $0.07 per diluted share, in the same period last year. |
| · | EBITDA was $1.9 million for the nine months ended December 31, 2017, compared to $3.1 million for the nine months ended December 31, 2016. Please refer to the reconciliation of EBITDA (a non-GAAP measure) to net income (a GAAP measure) in this release. |
Financial Position
At December 31, 2017, TechPrecision had $3.0 million in cash, and working capital of $5.4 million compared to working capital of $5.0 million at March 31, 2017
Income Taxes
For the nine months ended December 31, 2017 the Company recorded tax expense of $946,000. This tax expense includes a $485,000 non-cash discrete item, recorded in the third quarter, the result of a revaluation of the Company's estimated net deferred tax assets to reflect the new 21% U.S. statutory tax rate as provided under the Tax Cuts and Jobs Act, recently enacted on December 22, 2017.
The U.S. tax law requires that taxpayers with a fiscal year that begins before and ends after the effective date of a rate change calculate a blended tax rate based on the pro rata number of days in the fiscal year before and after the effective date. As a result, for the fiscal year ending March 31, 2018, the Company’s U.S. federal statutory income tax rate will be 31.55%.
Cash paid for income taxes was $30,000 for the nine months ended December 31, 2017. The Company does not expect to make any other significant tax payments for the remainder of the fiscal year.
Teleconference Information
The Company will hold a conference call at 4:30 p.m. Eastern (U.S.) time on February 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 March 13, 2018. To access the replay, dial 1-877-481-4010 or 1-919-882-2331. When prompted, enter Conference Passcode 25027. 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/25027.
About TechPrecision Corporation
TechPrecision Corporation, through its wholly owned subsidiaries, Ranor, Inc. and Wuxi Critical Mechanical Components Co., Ltd., 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. These forward-looking statements are often identified by the use of forward-looking terminology such as “believe,” “continue,” “expect,” “will” 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 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, pricing and business development difficulties 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. Any forward-looking statements speak only as of the date on which they are made, and the Company undertakes 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.
-- Tables Follow --
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
December 31, 2017 | March 31, 2017 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 2,971,029 | $ | 3,066,156 | ||||
| Accounts receivable, net | 1,609,588 | 1,870,672 | ||||||
| Costs incurred on uncompleted contracts, in excess of progress billings | 2,482,234 | 2,097,221 | ||||||
| Inventories - raw materials | 207,292 | 141,792 | ||||||
| Other current assets | 509,779 | 422,096 | ||||||
| Total current assets | 7,779,922 | 7,597,937 | ||||||
| Property, plant and equipment, net | 5,303,210 | 4,912,202 | ||||||
| Deferred income taxes | 1,967,437 | 2,871,680 | ||||||
| Other noncurrent assets, net | 29,241 | 100,000 | ||||||
| Total assets | $ | 15,079,810 | $ | 15,481,819 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 259,035 | $ | 365,308 | ||||
| Accrued expenses | 817,995 | 893,415 | ||||||
| Billings on uncompleted contracts, in excess of related costs | 576,710 | 642,831 | ||||||
| Current portion of long-term debt | 753,990 | 717,481 | ||||||
| Total current liabilities | 2,407,730 | 2,619,035 | ||||||
| Long-term debt, including capital leases | 4,368,120 | 4,874,721 | ||||||
| Noncurrent accrued expenses | 3,226 | 17,742 | ||||||
| Stockholders’ Equity: | ||||||||
| Common stock - par value $.0001 per share, 90,000,000 shares authorized, 28,824,593 shares issued and outstanding at December 31 and March 31, 2017 | 2,882 | 2,882 | ||||||
| Additional paid in capital | 8,485,755 | 8,258,820 | ||||||
| Accumulated other comprehensive income | 21,509 | 19,328 | ||||||
| Accumulated deficit | (209,412 | ) | (310,709 | ) | ||||
| Total stockholders’ equity | 8,300,734 | 7,970,321 | ||||||
| Total liabilities and stockholders’ equity | $ | 15,079,810 | $ | 15,481,819 | ||||
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Net sales | $ | 3,642,294 | $ | 5,318,610 | $ | 14,061,574 | $ | 13,619,578 | ||||||||
| Cost of sales | 3,219,543 | 3,266,721 | 10,465,235 | 8,558,680 | ||||||||||||
| Gross profit | 422,751 | 2,051,889 | 3,596,339 | 5,060,898 | ||||||||||||
| Selling, general and administrative | 596,271 | 1,955,093 | 2,236,371 | 3,582,856 | ||||||||||||
| Gain from claims assignment settlement | -- | (1,122,287 | ) | -- | (1,122,287 | ) | ||||||||||
| Income (loss) from operations | (173,520 | ) | 1,219,083 | 1,359,968 | 2,600,329 | |||||||||||
| Other income | 86 | 1,130 | 1,633 | 8,705 | ||||||||||||
| Interest expense | (104,861 | ) | (207,521 | ) | (314,057 | ) | (583,999 | ) | ||||||||
| Total other expense, net | (104,775 | ) | (206,391 | ) | (312,424 | ) | (575,294 | ) | ||||||||
| Income (loss) before income taxes | (278,295 | ) | 1,012,692 | 1,047,544 | 2,025,035 | |||||||||||
| Income tax expense | 413,096 | 20,598 | 946,247 | 41,556 | ||||||||||||
| Net income (loss) | $ | (691,391 | ) | $ | 992,094 | $ | 101,297 | $ | 1,983,479 | |||||||
| Other comprehensive income (loss), before tax: | ||||||||||||||||
| Foreign currency translation adjustments | 601 | (1,095 | ) | 3,187 | (2,319 | ) | ||||||||||
| Other comprehensive income (loss), before tax | 601 | (1,095 | ) | 3,187 | (2,319 | ) | ||||||||||
| Income tax expense (benefit) on other comprehensive income | (36 | ) | -- | 1,006 | -- | |||||||||||
| Other comprehensive income (loss), net of tax | 637 | (1,095 | ) | 2,181 | (2,319 | ) | ||||||||||
| Comprehensive income (loss) | $ | (690,754 | ) | $ | 990,999 | $ | 103,478 | $ | 1,981,160 | |||||||
| Net income (loss) per share basic | $ | (0.02 | ) | $ | 0.03 | $ | 0.00 | $ | 0.07 | |||||||
| Net income (loss) per share diluted | $ | (0.02 | ) | $ | 0.03 | $ | 0.00 | $ | 0.07 | |||||||
| Weighted average number of shares outstanding basic | 28,824,593 | 28,156,115 | 28,824,593 | 27,602,775 | ||||||||||||
| Weighted average number of shares outstanding diluted | 28,824,593 | 28,873,237 | 29,564,841 | 28,261,110 | ||||||||||||
TECHPRECISION CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net income | $ | 101,297 | $ | 1,983,479 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
| Depreciation | 523,640 | 519,114 | ||||||
| Amortization of debt issue costs | 53,964 | 129,383 | ||||||
| Stock based compensation expense | 226,935 | 1,093,685 | ||||||
| Change in contract losses | (43,815 | ) | (320,900 | ) | ||||
| Gain from claims assignment settlement – noncash portion | -- | (507,835 | ) | |||||
| Deferred income taxes | 904,243 | -- | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | 261,084 | 1,251,278 | ||||||
| Costs on uncompleted contracts, in excess of progress billings | (385,013 | ) | (547,812 | ) | ||||
| Inventories - raw materials | (65,500 | ) | 4,201 | |||||
| Other current assets | (87,682 | ) | 167,263 | |||||
| Other noncurrent assets and liabilities | (14,516 | ) | (30,961 | ) | ||||
| Accounts payable | (106,273 | ) | (447,306 | ) | ||||
| Accrued expenses | (28,712 | ) | (412,198 | ) | ||||
| Accrued taxes | -- | (3,443 | ) | |||||
| Billings on uncompleted contracts, in excess of related costs | (66,121 | ) | (965,860 | ) | ||||
| Net cash provided by operating activities | 1,273,531 | 1,912,088 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Proceeds from sale of equipment | 80,000 | -- | ||||||
| Purchases of property, plant and equipment | (914,648 | ) | (452,820 | ) | ||||
| Net cash used in investing activities | (834,648 | ) | (452,820 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Deferred loan costs | -- | (159,137 | ) | |||||
| Borrowings of long-term debt | -- | 6,227,500 | ||||||
| Repayment of long-term debt | (533,297 | ) | (5,064,745 | ) | ||||
| Net cash (used in) provided by financing activities | (533,297 | ) | 1,003,618 | |||||
| Effect of exchange rate on cash and cash equivalents | (713 | ) | (279 | ) | ||||
| Net (decrease) increase in cash and cash equivalents | $ | (95,127 | ) | $ | 2,462,607 | |||
| Cash and cash equivalents, beginning of period | $ | 3,066,156 | $ | 1,332,166 | ||||
| Cash and cash equivalents, end of period | $ | 2,971,029 | $ | 3,794,773 | ||||
TECHPRECISION CORPORATION
SUPPLEMENTAL INFORMATION
Reconciliation of EBITDA to Net Income
(Unaudited)
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 December 31, 2017 | Three months ended December 31, 2016 | Change Amount | ||||||||||
| Net income (loss) | $ | (691,391 | ) | $ | 992,094 | $ | (1,683,485 | ) | ||||
| Income tax expense | 413,096 | 20,598 | 392,498 | |||||||||
| Interest expense (1) | 104,861 | 207,521 | (102,660 | ) | ||||||||
| Depreciation | 172,218 | 165,626 | 6,592 | |||||||||
| EBITDA | $ | (1,216 | ) | $ | 1,385,839 | $ | (1,387,055 | ) | ||||
Nine months ended December 31, 2017 | Nine months ended December 31, 2016 | Change Amount | ||||||||||
| Net income | $ | 101,297 | $ | 1,983,479 | $ | (1,882,182 | ) | |||||
| Income tax expense | 946,247 | 41,556 | 904,691 | |||||||||
| Interest expense (1) | 314,057 | 583,999 | (269,942 | ) | ||||||||
| Depreciation | 523,640 | 519,114 | 4,526 | |||||||||
| EBITDA | $ | 1,885,241 | $ | 3,128,148 | $ | (1,242,907 | ) | |||||
(1) Includes amortization of debt issue costs.
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