TPCS - Earnings call transcript Q2 2018 | TechPrecision Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the TechPrecision Second Quarter 2018 Earnings Call. All lines have been placed on a listen-only mode. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, Brett Maas of Hayden IR. Sir, the floor is yours.

Brett Maas

Thank you.

is Financial Chief Officer. today Tom Officer; call Chief Sammons, the Alex Executive Shen, and On The the company's is website, call also www.techprecision.com. being simulcast on

of that Private for we in forward-looking results the XXXX. safe company's begin, forward-looking remarks and to company SEC. more management the Act we I'd claims as risks additional to protection Litigation your uncertainties, statements the our Before harbor discussed forward-looking refer therefore, questions. make statements uncertainties filings the like of risks and the may to which statements, and a listeners Actual contain the differ and Securities those in to from may are detailed may discussion response with subject financial in Reform contained of remind today, you management's Therefore,

addition, to In the the assumes update to estimates provide Shen, out With performance as XXXX. represents Alex call obligation that today, future opening these to to management's Executive company's TechPrecision to November Chief turn revise I'd or like Alex? XX, statements. no as of remarks. Officer, over the forward-looking way, projections of

Alexander Shen

Good Thank for us. and to thank day joining you everyone, you, Brett.

from our who revenue something on level. very at share our will our by McGowan, the Board, caused earnings I First, of the of a being stated, company public Chairman is board drag the Rich aware significant costs of

this. to time. been investigate will and Getting ways call. the pursue improve no There to earnings have further We continue actively at back to be all comments this and

sharp from -- initiatives our benefit focus to focus focus key on revenue and from continue on We stream sharp customers. sharp productivity consistent,

XXXX. year an profitable $X.X fiscal consistent year with performance. taxes and second ago. $X.XX a $XXX,XXX fiscal was of quarter to or when in quarter ago. The per second compared share the same million, XX% Net net income a Income operational And same higher quarter the or sales than of was year financial XXXX the of before XX% income another was quarter were increase $XXX,XXX quarter

maintaining nuclear markets. replenish to We continue defense, by move precision forward industrial backlog focus, our targeting to and

Tom Now, I'll turn financial more the tell us results. over our quarter Tom? call about second Sammons to to

Thomas Sammons

Thank Alex. you,

the XXXX ago. year or for quarter connection by expense. tax new second in and valuation utilization the primarily tax our As XXXX, the Alex a to quarter compared the XX% $X.X XX, second a a before with lower and XXXX tax annual estimated fiscal when higher product net based $XXX,XXX for $X.X higher to against same which tax the quarter been year XXXX for fiscal provided taxes provided allowance, of over of this million results significantly sales when is components ago, reduction have net the contract million was the for market of fiscal lag to defense $XXX,XXX, the attributed Gross year Income of quarter and $XX,XXX of operating our when tax components. expense sales customers. quarter $X.X on a asset. shipments Net was September were associated increased market for was $XX,XXX. by ended Income income compared Income losses sales noted, was defense Cash increased of one scheduled of to quarter deferred interim year, the effective of expense in volume of the rate. and paid same due the projects. non-cash in million million, new expense a $XXX,XXX increase on to same a cost largest Income the higher deliveries startup income of the the was in be decrease fiscal was small XXXX, profit compared Net higher can same $X.X second last XX% energy when in quarter overhead primarily plant between primarily our unabsorbed time taxes quarter our nuclear to same on shipment to decrease compared quarter ago.

Our diluted XX, $X.XX XXXX, share $XXX,XXX, September $XXX,XXX for fully was basic per ended net quarter to income and the September or fully per quarter income share approximately the as net XXXX. for quarter a $X.XX diluted XX, basic for and the of compared ended

shares, per and weighted average on quarter approximately XX.X Second and million million fully share an fiscal earnings for XX.X count of diluted XXXX based respectively. share basic is

we Turning finished $X.X at XX, to September the quarter sheet, million XXXX. in with the balance cash

at provided compared capital the working XX, of XXXX Our operations by six flow $X.X first XXXX. approximately at million March XX, September in months was fiscal to by $XXX,XXX increased Cash million XXXX. to $X.X $XXX,XXX

purchase used was In cash to that six service we months and fiscal placed new XXXX. during approximately $XXX,XXX the equipment of of machinery first into addition,

Our backlog XX, $XX XX, XXXX. million compared at October March $XX.X at XXXX, was to million

defense, to replenish continue Alex. to customers that, now turn precision With I call over markets. the on back business work We contracts aerospace, core and to nuclear focusing the our in new with industrial our Alex? will backlog,

Alexander Shen

Tom, thank you.

valued contracts Moving our customers winning and know-how high-precision high-quality competencies and focus markets, large-scale, with will core machining new our supplier. in forward, precision the high-precision utilizing established continue fabrication industrial defense, our to be on and we energy, in and a custom,

in the sector, relevant integrated would available cost-plus, submarine. module manufacturing $X.X the fixed-fee manufacturing information in publicly for sectors. and to the tube also contract the and The missile compartment; see for support Navy meaningful weapon we'll opportunities component development this defense has the kit process nuclear ballistic system for Columbia-class like pursue defense submarines. a development; I technology to reactor Kingdom opportunities aerospace, bulkhead strategic ballistic missile industry. some share and missile United billion and prototyping contract U.S. and design meaningful completion efforts; healthcare We to Columbia-class awarded includes contracts at continue and in the and product the This lead time,

industrial XXXX, as and years replenish we will we our nuclear the backlog. and our million approximately focus invested XXXX and and $X.X through machinery have equipment on We in new maintain markets precision fiscal defense,

our The be of year. now exact tentatively better have with up We I open in will would stockholders scheduled September of fiscal meeting call Q&A. the to like the for our date the XXXX meeting annual align to end forthcoming.

Operator

first from comes Our ARS Ross question. Please question with your Taylor Instructions] Investment. state [Operator

Ross Taylor

And, great done a stabilizing turning job of you. this Alex, something profitable. you've and consistently Thank business now into that's

Although be what higher meaningfully? done level can the only drive somewhat profitable, top-line the profit to ex-growing

Alexander Shen

more, because of. will think grow absorption profitability, able when to more care we see top-line I we be the will taken the be

making right, We're So, currently, a you're little of we're stable. profit. bit

care should because bottom-line, drop As the we absorption have of will more already. top-line the -- to increase been more, taken

Ross Taylor

out your dropped over recent bidding the -- you period. -- in other point of in in looks bids there look substantial going -- Washington a you you factors? at talk about Can some lag what's the this are time? environment you we have a or of substantial Are if time on point do backlog And orders Okay. at Are bit what like? because seeing

Alexander Shen

for that related It's Well, That's our so some I our with a appropriations is this you bit information yet. time we tell so public to not primes. primes. the of a there consumption of are time from funding Washington why the much lag. is is not can itself. funding profiles encountering It's in What lag

Ross Taylor

and... Okay,

Alexander Shen

moment. that bidding at were -- so asking bidding and is quite the about, you environment environment the Hold Ross, the on, strong

Ross Taylor

wide of array have you're -- bids. -- you a actively you're working that a Meaning

Alexander Shen

in Wider than we past. have experienced the

Ross Taylor

and balance And, of good equipment we were into be $X.X like confident on very the last to spent the obviously the over of year? next you That's equipment of over should few news. the the investment about quarters. like Okay. expect plant the fiscal million very -- that and because over this What and

Alexander Shen

a not of -- like question. spend I'd too much of know That's it. to to like and don't I'd the yet, maintain amount cash good I because have

would do milestone factors. One, we of how depend on with cash require the on several things, us payments. that buy less cash contracts will We that buying So getting a and including comfortable a is to our to dime are material cushion. need versus material of couple

downtime in So I very of your factor. factors out and another and That's The all have relay was in. ins of the will them machines order extensively. as older can't and our because some know more question overhaul requirements, to refurbish machines that cash don't that it some -- factor we we couple require that answer experience yet. more our just outs well, another I decades

Ross Taylor

understand. there of I moving Yes, parts, a are lot

Alexander Shen

are. won't Yes, be is But there There something. zero. it

Ross Taylor

this I the haven't is a cut, And yet what, would debt a at debt cash, point, seen so not but the level what in you aggregate of Q, seen million $X.X is. have say,

Alexander Shen

minute. me Tom to turn Sammons that Let for over a

Thomas Sammons

Yes.

debt about of Our at September. end the is million total $X.X

Ross Taylor

Okay.

job. basically, you guys an done excellent have So

able in been net to million -- You've have about you $X debt.

management team time. leadership or having a million You've started -- after for for under previous into so spent CapEx, the $X.X long team a and

the you're -- So way developing. the business about you like is basically seems confident pretty

been figure but that guys it obviously, Your can initial to you having I would would have around more assume million have comment, won't the said price block, bankers reduce indicates unfortunate, is it's $X options safe hired what you you that the explore you what million, be it assume to a that costs, done, comment the for -- as company public what $X.X you company the be as to well rather, year? ability public of which being

Alexander Shen

That's Ross. I'd that. below we're say too much

Ross Taylor

that below or slightly that? Meaningfully below

Thomas Sammons

bandied numbers $X.X No. like talked being $X last time million, we about. the of it was million kind you're

we So I were... think

Alexander Shen

have We that on worked cost. reducing

it's expect below. million, $X million below little around would $X a So I or

Thomas Sammons

depends. Again, not it something That's equation. a straight-line that's

Ross Taylor

lot like you Right. clear that in tough it's you're a marketplace. a that but company a of small Well, have in public while very place a seems being opportunities,

-- or its and on developments await I'll Board that question strategies, one. there be should So and to as we'll pursues pass the eagerly the the it Board options another

Alexander Shen

for Ross, support. thank your you

Ross Taylor

you, sir. You’re welcome. Thank

Alexander Shen

sir. Yes,

Operator

Hardeson. John Our Please comes next question. your question state from

Unidentified Analyst

Hi, Alex.

First the which to I'd question. in me How be brings quarter nominated Directors? are of row like profitability, to you XXth get you you for Board a commended of do and your my to I that to congratulate

Alexander Shen

not don't would John, a the purview. how That's thank I know Board you, to Well, the get of board Directors. That compliment. my I decision. for be in nominated

Unidentified Analyst

find board. push something from to heavy on and that forward, you if lifting I if like do the to Well, hear can because there's doing can would out, the to I think back like I see you're you, you I'd

Alexander Shen

Understood.

will you. come back to We

Unidentified Analyst

Okay.

bids? What to which bids Next if Ross you is percent your company does make typically say back what XX asked, percent up, what the of bidding receive? -- goes question,

Alexander Shen

think not totally situation, I It's depends something sir. easily... that's that on each

Unidentified Analyst

for defense? About

Alexander Shen

on it again, is. it Well, depends really piece which

Unidentified Analyst

X? not for awarded XX, there's company, And bid any the Okay. overall you're average

Alexander Shen

come that different. That it the to fits timing would specifics. specific. be into well. timing. delivery fits specifics There's quite a because way the it play How And inside specific. lump to that situation very into is how time-bound There in available is They're the they're into as requirements -- that also each mistake try the all together capacity

So every I'm these the single not one specific. just It's to of is dodge question. trying

So it's need if averages. things I right not more, that, bid bidding on a get understand to be I I I the law fit. of that might but more,

And fit sometimes but fit be it depends. this that I'm not the answering last year it to very well, same sorry doesn't thing year.

Unidentified Analyst

defense? Are the increased for bids

Alexander Shen

Not in only increased energy aiming precision for defense. that No, we sir. three. sectors and the three defense, nuclear are industrial, are all The at: bids

Unidentified Analyst

on will Okay. the it Anyway pass Alex, caller. excellent next job and I to

Alexander Shen

Thank you, John.

Operator

Our next from Jim your Please question question. state comes Konig.

Unidentified Analyst

Hi, guys.

you Just couple Board. of already motion I that the that on be you a on should second a follow-up had, questions the Alex.

do can meeting? are you The of do next anything would planning some kind I got, question Alex, I So still I investor that. to help,

Alexander Shen

just I yes. is, know don't answer yet. The when am. I

Unidentified Analyst

Or... future? near the in think You

Alexander Shen

I would think check. the for -- That's I my would we what need I was to it'll I opinion, well, venue, asked shareholders think it'll I don't pick guess, I before need I next meeting. to if think. But the and be think

Unidentified Analyst

Okay.

-- think believe helpful. I would I it be

it So can to would do anything great. you expedite be

the follow-up up other how how on end many typically, you one a against? When competitors bid So of -- you job, questions. bidding

Alexander Shen

five. to Zero

Unidentified Analyst

a is guys and, some you could number sole-source limited there cases, in it? So

Alexander Shen

particular words requirements. designate those Sole-source, particular number of a

So words using categorize I trigger those particular it because wouldn't those specific requirements.

Unidentified Analyst

cases, that, understand you but some guys... in I I mean

Alexander Shen

be us, was zero. sole may bidder, only the bidder, the The

Unidentified Analyst

appears that's called Okay. hard I I All means. site I'm And last Ranor into And on listed. what having now. that contracts USAspending.gov. And understand that ran understanding and there's question, the right. time a a

Alexander Shen

information believe actually be together on not that or form. Sammons a Their website that is to I that incorrect. with we way, is shape went website separately. in And any believed Tom and

Unidentified Analyst

sense it that's Okay, of numbers Because constantly, tails but... it, except or repeated heads no I on get makes are there helpful. they make me couldn't which to

Thomas Sammons

as It's no it Well, nonsense. makes sense to well. us

Unidentified Analyst

now. that’s helpful. congratulation that’s Okay, all Again got, very guys, I right

Alexander Shen

Yes, sir. Thank much. you very

Unidentified Analyst

You’re welcome.

Operator

Please next from Our with question your question. Potter Monarch comes Michael Capital. state

Michael Potter

guys. Hey,

where our on decline you a perhaps growth saw major basis? the and a three us saw quarter-to-quarter can more industrial the bit comp Alex, on little where Another quarter. and solid a give segments, color basis, we defense, on we nuclear

Alexander Shen

basis? On a quarter-to-quarter

Michael Potter

Well, QX versus versus 'XX. QX 'XX sorry, QX QX -- last 'XX year, I'm

Thomas Sammons

The $X.X up million industrial down Tom. is $X.X was $X.X industry nuclear was defense precision and This million. was million and up

Michael Potter

Okay.

was So up million, quarter-to-quarter, defense industrial nuclear down $X.X and $XXX,XXX. was up $XXX,XXX was

Thomas Sammons

Correct.

Michael Potter

And Okay. backlog? what in about regards to

Alexander Shen

year a ago? from Backlog

Michael Potter

just delay. a let's Where the point of, is flow. is, Well, backlog bit the in where sense end strength end we Where so of order the say, the can a hurdle of QX compare or sticking the seeing QX the or where at guess, I of the little get versus, we're if we of year. beginning we're seeing the

Alexander Shen

business. the from I -- you're think the the analysis is will different that the highly to by affected of do be lumpiness sir, attempting

Michael Potter

backlog we you pipeline as then, pipeline a trend, indication will is. both Okay. well. the of us and give some is, current Because give where When the we can its more us the use color, current, maybe where lumpiness and that on use better when

Alexander Shen

don't we currently available publicly So, our make pipeline.

Michael Potter

Okay.

So get we end we really can't markets. guess, a in guess, good the I -- of, Right? I where -- our strength the sense don't

Alexander Shen

the I strength. by XX the class; markets attempt give for on Navy is volt you telling more strength and $X.X the volts you the what for for that So by end our lead a awarded color, is in U.S. billion do Columbia contract to example,

Michael Potter

When has awarded? And Sure. started? that that was

Alexander Shen

was -- publicly awarded, date sure September. exact I'm about when not the It's it it when was approximately available. available actually

Michael Potter

Tier And anticipate will you that -- when -- down Tier I to so of do month the, start flowing sub September. X approximately X, the sub-primes? guess, So

Alexander Shen

of Columbia is been that one awarded already class. contract Well, several has that for

Michael Potter

will that award? No, feel I understand that. effects When the do of we you that think

Alexander Shen

Of only too or without answer award information. that question much I'm awards insider your the to devolving specific all combined? trying

awarded more on information continued the Columbia the has awards information I'm September has And those of also class from fund to ranges. sector up-to-date the of felt have award was already public by up-to-date, the the $X.X U.S. awards billion Navy. simply of and So Columbia awards. giving that billion $X class we effects

what is have of simply this experiencing. So strengthening been we a

So your on was question strength.

given you on billion It's now. $X answer So the strength. I've

Michael Potter

and for $X how it's So billion it's additional many boats?

Alexander Shen

the for one boat. This is only lead

Michael Potter

okay. lead boat, One

So to, it's this boat? $X billion awarded boat, assuming lead okay. And that electric for I'm one was was

Alexander Shen

customers. about publicly is This I available. don't talk

you please to, will I look when if you a more get And detail. take So you'd a like chance. definitely give

Michael Potter

available into One Got why to our there other the thing, current we don't be shareholders website? it on I to date. website, and out seems go it. tried the Is information of reason a to particular have

Alexander Shen

been The and modify website has it get and slightly will it continue to we been up-to-date. modified,

has not Our does contribute been not secure our the because to us the does on website, focus business and website profits. not

and recovery. recovery Our give maintaining completely our is an on company recovering focus on our and inch the and totally not

Michael Potter

an inch So by having you'd would recovery? an be up-to-date giving -- on website, that the

Alexander Shen

did I say not that.

Michael Potter

Exactly.

unfortunately, company, company running So with public of owners a of the the it's favor, the it's look a shareholders. it, into do and part of communicating part me also

Alexander Shen

use We for and make of steadily, work the website and rest excuses myself for form we some this but being me hope patience slowly is through some The that. the company. updated. as Let

Michael Potter

Okay. I'm running. sure get that or next the two, could up month in and possibly

Alexander Shen

false give a intend and don't I do expectation will lie, not I don't of month to impressions. to not have I That intend or happen. that two.

Michael Potter

Right. All right.

So to happen? it's not going

Alexander Shen

happen. It slowly, will will but It happen surely.

Michael Potter

it. Got

back the get in will I alright Okay, Thanks. queue.

Alexander Shen

Thank you.

Operator

question Please Our your Taylor. from comes next state question. Ross

Ross Taylor

-- qualify small as from Pentagon business Alex, you Hey. can you a the standpoint? guys

Alexander Shen

we Yes, government standpoint? the do. From

Ross Taylor

Okay.

like. a and of there use contract, to for obviously the contractor And so in business small major any are enterprises benefits make

So competitive position. helps your would you in that that assume I

Alexander Shen

us. helps helps when It us it

up bidding small we're other against business. sometimes right And

Ross Taylor

looking beaten what reported have, numbers a they you by on quarters right. quarters; next to perform, you've a year-to-date, a little you you revenue year's were puts two at Right, In $X ago. flat with last That even only you've over -- two if don't year million. if the are rate run

top-line run a to rate reason since-- company? suspect year this quarter XXXX. since of best Is that on any year-over-year your continue have you the be best You'd grow there cannot to to

Alexander Shen

to would that Well, forecast. a me cause you give

Ross Taylor

it tell ask a would you I'm to you asking why business. you your growth. weren't me to you to able me generate, I to give you I continue No, expect what say to you're to for reason continue -- cause going When to this grow should

You've done a great job this year.

So you've $X old put, over base. on year, far -- on million a you this $X $XX an as said million plus million

number impressive a honestly. growth year-to-date. That's So XX% pretty quite

Alexander Shen

It is.

the think lumpiness the things. I can of business affect

I be period. traditional last but when that more good XX -- So XX-month answer it's more your affect comparison, a methods us. the question us take performance directly, affect performance a to XX-month to we can that period, months' might will lumpiness understand about rolling the idea of talk the

Ross Taylor

letting years, it's in is needs build we're probably the in growth mutual the of a than a two with building fair a currently submarine over see at contracts, driving seasonality lumpiness actually, to opposed amount these looking factors, should there's things out as not looking and obviously but of obviously, or on Navy demand. fewer. more substantial so building you've -- There's there's with anything Because other tailwinds tailwinds year building a submarines significant to if tremendous number that's, that, orders as and and planning if they're of you highlighted

Alexander Shen

That's correct.

Ross Taylor

you mentioned And an hatches, for when works you seeing or doors, mentioned inside look the on expertise boats capability, you growth such these areas -- you number TechPrecision's at are the as capability on you obviously your when you well us -- the Can idea of of boat, seals. earlier, opportunities? you -- boat areas give where

Alexander Shen

knowledge. you So is that an also let give public example me

-- number be boats adding two boat missiles. for number planned, through they called more have, what's For will class, capability X, XX Virginia XX Block

they're more four the that that existed extending So of basically hasn't What before. the lot the area more the in causes length and in center missile adding boat boat. is section tubes a

So tubes. that It's generates well shipyards parts. as just the subcontractors, missile build more four only as not demand for and primes -- to to more their both the

missile tubes are seven four these So shooters.

So including fall itself Ranor. launching of things very would that also items large them, the there are a that and they but a in is have of inside missiles, capability of different to expertise Tomahawk precision number the boat missiles, high into seven up

Ross Taylor

Right.

these you've boats forward prior for others are areas And and of because providing doors historical success had so we that electric These bigger. boat should, going are getting areas are and -- submarines. classes -- for

adding So I to the and, you're your but correct? of capabilities. that fact to these that more exploring assume equipment also refresh have, what some of was not additional and new add potentially you Is only

Alexander Shen

Additional capability and capacity. additional

Ross Taylor

Right.

say, up. as everything So, is here setting you

are you're if So what fairly few be about where this me with heading it revenues or should you about not that correct? talking should over what that revenue telling the would be year, comfortable seem years. Is next comfortable

Alexander Shen

That's correct.

Ross Taylor

be higher they would today? that meaningfully And are than

Alexander Shen

like… Well, meaning that will higher meaning

Ross Taylor

situation we Yes, so and working we would these and my get get very should ramp just you. meaningful expect, you increase obviously well you'd comment, that to it in able seems should numbers the in out the are expect play up things it -- where you'd flow-through a seem you're From this profitability? things is for you'll original If that me to be like. earnings the where would

Alexander Shen

need. what all Right, that's we

Ross Taylor

grow appears love Board's support to a management value. ways some achieving served been shares luck be through not well a find time have a point as for. honestly, many team, efforts good too I shareholders Perhaps few cash strongly Well, And we quite no which had lost gave prior we to maximize you by, there's selling. in the what where Yes. it. to And

the So up. good work keep luck, good

Alexander Shen

much. very you Thank

Operator

looks was question. And like it final our Okay. that

Alexander Shen

from Okay. management. Nothing everyone. Thank further you,

TechPrecision (TPCS) 13 Nov 172018 Q2 Earnings call transcript