TPCS - Earnings call transcript Q4 2018 | TechPrecision Corporation

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Operator

Greetings and welcome to the TechPrecision Fourth Quarter and Year-End 2018 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the conference over to your host, Brett Maas of Hayden IR.

Brett Maas

you. Thank

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

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

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

Alexander Shen

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

fiscal to highest revenue third year million fiscal XXXX. report four $XXX,XXX to are we was annual compared sales our year XXXX. pretax $X.X consecutive in years million the and profit. of for fiscal XXXX, in year Net For $XX.X happy were Pretax income

fiscal primarily a our number XXXX, Our from in results result in were turn and lumpiness for related higher by production. projects in in driving which unabsorbed sourcing margins impacted customers, overhead amounts extended of the to were gross lower of the slowdown of funding

volume shipped margin higher components during low the period. Additionally, we experienced a of

that, million four to for actively activity XX prior opportunities both months basically more are levels to The we are to times for return with $XX fiscal between I thanks experience pursuing patience and offer growth. were sincere sales and your short-term that opportunities $XXX $XX will my in to million. to offset engage delays our next Shareholders somewhere for collaborate million our opportunities are support We just and more journey positively we XXXX XXXX. customers five project under expect with fiscal We growth Board year. continued Net in to the consistent we of our aggressively tandem, the of and to your continued our the embrace and capture delays. our as

previous our call, of results. change. business released X.X number to to defense customers. earnings orders I XXXX. from pipeline orders to added and advance for at million As we expect backlog as Sammons new call year-to-date Tom last the XXXX quarter These of orders we to materials XX, fourth like turn of in March December quarter our about XXXX. beginning our in call, $XX.X million a fulfilled acquisition be This the over a us certain On fourth to from our fiscal to enabled agreements discussed stated are us million new tell now at XX-month of not in a new specific build does components This on strong for which before we key customers. funding our more $XX to financial I'd our XX, grow Tom?

Thomas Sammons

increased Net million, new precision higher the product $X.X on the by one when Alex. Net by of fourth to industrial when our sales decreased Gross quarter, Navy’s $XXX,XXX same million, year net shipments approximately our $X.X same defense a of decrease a year-ago, the million profit in compared when in $X.X million fourth attributed million with to project of by own in our the you, a a components our compared quarter primarily the compared largest when market was of workflow, approximately activity market market U.S. increased ago. to the of higher year-ago. decrease XXXX. evaluate The as XXXX of the slowdown or Thank programs. sales compared low customers $X.X quarter project connection in costs were nuclear the quarter can the quarter to Net be $X.X our sales fiscal customers same to to of support sales same in quarter in overhead margin submarine for shipments products. defense also fiscal to primarily sales lower and unabsorbed lower $XXX,XXX their to volume in

at of fourth $X.X fully of million the result the valuation of Our tax release performance, quarter balance jurisdictions. income net financial or profitability XXXX a primarily diluted valuation as quarter The compared of The the net the per of date, fully quarter benefit tax trends and basic of diluted sustained for of to was loss share million, evidence the positive release sheet improving of of fourth basic and was a certain share the million. XXXX. per a fiscal $X.X fiscal $X.XX includes based of on approximately XXXX, weight allowance achieving for business fourth $X.XX net $X.X fiscal the in $XXX,XXX allowance or and of

sales year by fiscal For our X% XXXX, to $XX.X net increased million.

our profit net when increased XXXX, XXXX. to market by decreased Gross industrial in market when XXXX million while XX% million, in XXXX. increased $X.X million decrease to $X.X sales by was sales compared compared fiscal market $X precision when our net fiscal $X.X in or fiscal Our energy our in by fiscal compared defense sales million

higher lower operations or Fiscal XXXX million from gross suffered due as Income million, $X.X settlement to same the products of projects year-ago. operations period profit gain earlier. from a from customer in mentioned compared claims of $X a to margin included million. decrease when slowdown $X.X is and Our to XX% primarily a income assignment margin one-time the the due and shipments

net deferred year provided as new federal the includes in tax remeasured tax XXXX, of recently the $XXX,XXX and assets of the Jobs on expense enacted U.S. $XXX,XXX. statutory Tax of tax December XX, to the For tax under expense, reflect This tax rate recorded result Cuts fiscal XXXX. Act non-cash we XX% expense

our as any offset any non-cash fiscal continue does year. expense, deferred Cash tax to for The to utilize is primarily significant of paid income not year we the to expect for tax payments assets a make XXXX. Our calendar $XX,XXX XXXX tax liability. the Company tax was taxes expense for remainder

loss diluted for to an for approximately and $X.XX diluted XXXX year million weighted respectively. net share fully share approximately earnings Our based or share Fiscal fiscal $X.X $XX.X shares of per was $XXX,XXX compared the and per diluted, is XXXX. of as basic for year basic on and fully net or basic the fiscal fully income XXXX average count year per share a million $X.XX

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

XXXX and machinery service now used debt Our back fiscal cash equipment that was $X.X to Alex? capital agreements. XX, our we $X call year and at XXXX, was XXX,XXX million repay turn was the and respectively. Alex. purchase in With under $XXX,XXX used Cash working operations of March principal over and long-term fiscal XXXX placed to million by cash in million that, to new flow during of I approximately $X.X approximately XXXX provided will

Alexander Shen

proud defense manufacturing naval is and industry, you, Ranor subsidiary. submarine its Tom. through TechPrecision specifically honored serve United Thank the to States

answers. Columbia future will SSBNs are shipyards, and X. XXXX. ballistic displacement, XX to the replace I build tons nuclear XX replacing Columbia-class XX two Virginia-class to demand program. significant and gleaned submarine and there questions slightly in submarine diameter centerline compared double Number publicly nuclear it continue two, in to this currently is reviewed wanted larger hull at call all large in submarines make to overall Virginia-class it XX,XXX the one section like and in this the At the to new workload meaningful doubling Number overall drivers We now be that sector. existing construction that than four all XX-foot over would we missile Module, These for business the program a an the starting with a from opportunities with the service. is the second Ohio-class again. to available that up see is demand years To are information payload Ohio-class period sure the once expected I’ve Virginia-class open of Block submarines XXX-feet Virginia to will represents of SSBNs. starting is illustrate, Payload added tubes

Operator

conducting question. session. Instructions] question-and-answer At question a the Our line [Operator we proceed ARS be from will with Taylor Ross Investment Partners. this from comes first time, of Please your

Ross Taylor

$XX Alex, your about million to more color comment are business in the $XXX near-term opportunity? currently pursuing million that give for you project could you us on

Alexander Shen

a in can, usual. as fashion I limited

and ascertained The engaged an are am of them get fact the are customers there to focus that on with these is one on So or attempting quotes pretty these. quotes. clear. actual pursuing amounts I each basic. need have facts. with the actively I is the These

two and requirements. focus Our third niche the it is number fits precision industrial customer on where our defense where it number and fits nuclear, primarily one on with

distribution for. So aiming we the three sectors those within I nothing what are think is there unexpected over

Ross Taylor

Okay.

in its of the $XX time getting horizon fact I Columbia-class Navy Block Virginia-class come and boat successful at given the on. million, fact program talking first of X the of start to looking in would itching two before that been each if this that is that over extra kind So years $XXX to building has an in the has about million you're assume that what And business?

had what we kind amount? extensive conversations, are looking pretty of probably for horizon You've at dollar that time

Alexander Shen

asked So multiple questions. think I you

and I want X is sure them that each understood carve answer up properly. me Block one. make Let to

get has since nine X to Block boats that originally XXth had that has gotten approved with So needed approved. the

is a it So XX-boat block.

does is hull payload nine Payload added subsequent boat which add that Modules, not have more to first being four the section Virginia X-foot The tubes. that's but the do,

been. to is like be that Block for intended Block year to the And a So comes X XX-boat cadence two the has just cadence. cadence X

Ross Taylor

they actually desire start shipyard to to Yes, I boats extra use can the two expressed additional has The they boats that. the Navy to – space so up Columbia-class the two water extra speed Virginia before faster, build new to understand. in get the accelerate

I out, on kind get a With of would be it revenue at publicly you also available run million did safe that's in on looking $X the past a a payload to hull basis? submarine. $X But that Virginia module, on you double rate it So extra so information. than looks assume to it, type hull, more to guys like million should submarine this a that want –

Alexander Shen

basis, I do have on hull. it much make On public not I a a how much hull very

Ross Taylor

a – really say book understand this talked is is would their the a easier – I lumpy, and those we're the out looking side it's really on where a it of don't be lumpiness work moves bluntly, do the not we're of in at could a make Company decade you I mean shareholder, it revenue order this We decade to if I I low forward, on and book. past a in as honestly for thing Columbia-class Virginia-class this boat, with what the minimum. regard predict situation as backlog think that story can't of I yet rate I if a to not quite us. run would a things insignificant a And would the be but about able as lot we'll that know about TechPrecision.

an I – good idea your I – effort. large but from an shareholders idea we're at I have pretty a information, So trying much think get other looking available of so to am publicly don't made what have as at

help is. run So I be but it opportunity would the to for might it helpful, a out these rate or specific if think know I have helpful you not programs want hull, on what guys of might us don't here the know. basis, out to be figured parts who

Alexander Shen

us I have from are benign. to I so that not understand. protect others

Ross Taylor

idea is As interesting – a you think stage at very guys good in a you're with sitting what in close in isn't have to good idea I this it, me programs here situation the where are assumption? having am year to you've you my going without actually the looking Navy this and you starting correct that pretty these said I to at what's won starts exactly is as I guess that given fiscal building, October to in be that of what a that

Alexander Shen

a which we're have of very good chasing, idea We exactly yes. parts

Ross Taylor

Yes.

Okay.

is work to out Sometimes, a get witness. of with information trying you like to hostile – trying

Alexander Shen

and be hostile. lose. not attempting have we specifically one, up cautioned been So competition directly to not us I On because to I'm against this give edge might

Ross Taylor

Okay.

that orders like the to that at that different at they to a Electric have needed or basically way. and now? is which for oversee the your tubes an that metal? if released the built this try component metal but order rather in $XX metal Virginia-class in gotten the for operation metals order sit produce a sizable million and has for the to with BAE where Let's right Electric the boat. a parts components. Midwest rather sit sit Boat million Is does order in an released sizable How recently Does that if $XX alloys work was launch of metal released – that Boat, foundry? they've factories? that the certain contract, not forge at or Is metal metal and

Alexander Shen

and it over I of we me our have probably be contract from to Well, the would lumpiness when by the to out funding an it build is time makes customers. in our sourcing actual and

Ross Taylor

Right.

Alexander Shen

So we that it’s can surmise here. not

Ross Taylor

Okay.

line. the down So it's somewhere else

have come at out. I I’ll a else Okay, step shot someone back. I’ll let you. will probably

Alexander Shen

Thank you much. very

Ross Taylor

care. Take

Alexander Shen

sir. Yes,

Operator

next from [John Private question Investor, with [ph]. your [Operator Instructions] Hardison] comes question. proceed Our Please

Unidentified Analyst

and see to positive Hey, year per meeting New meeting, looks it profitability. the new in of wanted math holding the past million from And XX-Qs, the XX the for I to from of for helpful. show you. can program but XX submarine the on And don't Ross your was from million subs what payload the Ranor work thank have it, annuity work. forecast the like the on fantastic also and Congratulations York work backlog $X adds I XX Ranor I through to amount wanted Thank and and X. going in And or here the think I $XXX old a past, comment guys Tom. just and modules even That very million just I'm investor to slide plus congratulations not over a out, a sure said the about you another looking for I think because to submarine Alex done next Virginia very Columbia-class has sub subs, tremendous Virginia-class XX-Ks, Virginia-class going me I new forward? May years, you on say a have $X to we when

Alexander Shen

you. Thank

Thomas Sammons

you. Thank

Operator

Instructions] [Operator Please next [indiscernible]. Investor, proceed your comes question from question. Our with Private

Unidentified Analyst

you the the being Chairman, it Board on the of said from with very In Yes. call, by November cost drag statement public. of who is earnings the significant the opened caused aware

ways a us been so for please it could We months to be have been you’ve this. and It’s nine, Could seems pursue statement now continue since improve and eight, update to months, seven that an investigating, actually all so? on of and months. seven appropriate been least you minimum It pursuing investigate it's XX actively now an time do to that. give at

Alexander Shen

of an that. we're first on in not give you think to I detail prepared update all

strive strive and We to on continue value shareholders. our to to for get services pay best less

Unidentified Analyst

statement, getting issue, paying you different for better services a issues. what value and in That's said that less than different two

Alexander Shen

understand that. I

Unidentified Analyst

question the you at didn’t all, answer so Well, right?

Alexander Shen

your prepared on to question. reduction. Like concentrating you to answering answer. cost I doesn't just that was that question. we diligently very was the not as know answer we I first, But tell your prepared to I well been adding the question, have said, I we're that answering are

Unidentified Analyst

Ross adding as to the think you’re non-answer. I said,

Alexander Shen

I I Well, answer. to told prepared wasn't you

Unidentified Analyst

Well, seven months said you the… ago,

Alexander Shen

I So being and very direct honest. was

Unidentified Analyst

seven Right, very a ago, months Company. you were small

but conclusion, a of an what give in about, pursuing update, not sufficient for seven So an you months like seemed time a to terms talked update.

Alexander Shen

and that We'll you. back under take to advisement come

Unidentified Analyst

Thanks.

Operator

the line Private question. of with Please Our your next question comes from Koenig]. [Jim Investor, proceed

Unidentified Analyst

website. the you one currently Hi, work is the prototype website couple down you very on getting guys or guys the good. have Columbia, that updated guys. We're the Then that road? on question, a Alex are happy A looks things, any

Alexander Shen

prototype is specifically some Columbia. you Columbia or category on of of answer our work, or tactical to of ready not work kind part I'm sure But I'm yes.

Unidentified Analyst

for? Okay, $XX is to so that that million you million part shooting of $XXX the are guys

Alexander Shen

Yes, absolutely.

Unidentified Analyst

That's all I Thanks, got. Alex.

Alexander Shen

you. Yes, sir. Thank

Operator

[Operator Taylor Our from ARS next Instructions] line question the Ross of Partners. comes from Investment

Ross Taylor

Okay.

it First, to look this at way. regard alternatives, with question strategic about the

effectively where backlog assumption? because I a tell situation the a in those the for decade valued. to annuity. is actually You're assume it in come potential that any make be would any the to what company correct which and in Am value lever you strategic that be on sense doesn't putting will I you're you long – decision for the orders have making

Alexander Shen

repeat one you that Ross, can please question time? more

Ross Taylor

have back holder at looking language as November paraphrase for doesn't who that what of Board sense us you're about book from until Company quite what the or sale get – value it. be noted an maximizing language assume me sold or idea the time the a to direction saying the actually code the basis. been going you it strategic statement on know optimizing of of in made that It substantial that’s was are Company. approval shareholder in I be read this of you is alternatives to until that a business idea the any you're Any decision that long such enough about order a have Chairman as the make your effectively to and any or of

basis that we're basis. free it hard take orders answer are just on announcement any would portions Now cash of probably see but through a like stock they we have that those you're auction, and investors strategic the another bidding decision as know going forward the My it's decade going might asking an flow for assumption therefore not share The Dutch yet? that. nothing the put pretty whether on potential seen idea I a a result shareholders, the be the together been front-end would is to why be don't a the a unlikely you strategy just looks drive and are my by have us significant way who long for call retire sizable of flow until kind cash mean what time who stream to it's is annual which know an or people that's and you example on. to you a going share alternative what that assumption in assumption of book value I'm endgame that to on such of or other on is It's to have per to happened has higher. buyback that these

Alexander Shen

this I think safe here and I comment have at no to the out take way time. say

Ross Taylor

comment. a Okay. I'll no yes. take in comment means, No usually

that or for work doing options, making other to regard from they're bidding So with work boats weapons are away the of looking are States? from and United you use you subcomponents at UK where systems

Alexander Shen

the answer real Well yet. is, don't I know

Ross Taylor

So you're bidding for it.

actually can We Alex? have a conversation, Okay.

Alexander Shen

Yes, we can.

Ross Taylor

speak, just to Alex. I have

at – that were were in upbeat that looking you've the things nature. you this has about So the and when York, of been about there Company you New Is exceptionally anything opportunities on – New recent what's gone you weeks or more been you in developing made last enthusiastic the about over since that made is you enthusiastic were opportunity? the has less in York

Alexander Shen

number release don't all ever. I that Well,

there. So about million $XXX I actively next not the my XX opportunity between style somehow for of that it's talking that that and to number sure not. there. we're know really months, convey means to million really is sign pursuing a stilted in a more that’s think $XX the I is just fact enthusiasm don't more or less. that I Really, there want

Ross Taylor

produce something, need Or need News, lead how from they from Electric that long before Okay. to Electric do they And to Boat Boat Newport let need you is – do products? you how that they long know? the

Alexander Shen

with executable Seriously, I on of work on It empty certain and answer true depends on then depends center. a And really is items. The it that it how am or what operational busy number is. depends.

Ross Taylor

Okay.

things that and to to plants as added in your or a like and that you’ve added $X CapEx. was because last equipment worth that the assume assume the I for million and added was capacity spec. you've Boat I the of So I nature. Navy look component in – and of the works assume that of nature at on close had that Electric not in year

transom a really where here you yet tell variety can good is know of what's reasons over Correct? and is. and cannot see a coming the So how because you us of what we're that stuck you situation

Alexander Shen

and go So lumpiness our in is from to customers the bad quarter. carefully back I This what causing extended sourcing funding I a crafted.

for not under now that I'm I very I'm that so throw really Yes, company customers quarter. the running to think. the the business, wanting Okay, it's not correctly

Ross Taylor

us to those is I that’s next of quarter. sitting And Company the has that think way the the I who indifferent years, the to the was, that is honestly, nothing of Alex, know bluntly. the but do not the the I really The about are story quarter with the to story quarter, about what The front it story way. think you think me, quarter in you. is is opportunity tell need XX to

As these whatever so any going bent honestly backwards hide and else $X.X it. going, can't don't you're you you earlier, rescue does because become a to enthusiastic. from tell you guys important can It's over or nature. defense The an If them. know unless that therefore, the of obvious been help have is of thought Boat think quarters Boat place no you're small has with coming incredibly indifferent I within small you going but someone subcomponent supplier Electric tells start do. Electric and something were program keep why through. buys it's you work suppliers mentioned to pretty fact important can Obviously, this few you I all this of yet, of to and that the guys, going and was to you popping industry us you to me because go this else that of General that they out I've things build revenues one it. billion are don't business assets in at companies just look Dynamics an out business Honestly, incredibly company

what the So Anyone because stock about in apologetic story focus was who it. soft the something doesn't be who story. the the tell, quarter one sells quarter I was. basically on think a the to I No story for understand would knows be that direction, cares would don't and

Alexander Shen

much. very you Thank sir. Yes,

Ross Taylor

Take Great. care.

Operator

Please question from your Our next question. of with line Consulting. from Sameer comes the Gulati Gulati proceed

Sameer Gulati

a aboard lot communication, was [piggybacking] people lost. of I'm on Alex Ross of Ross – the I questions, – been any saying forth something gentleman. expect the and you with and money much had really different lot And here back of of give company I'm came the – spreadsheets. go off he in story and holder CFO I information, want GTAT. little and a We and me myself up a that some some being really this a company. Alex There investors bad there the a up Company and big with remember and as caught still Am I public your was still hopes may line? or in more got practices X% little the coming on a to want the Hi, a because here but may what cuff are to – appreciation of of kind time, a and your little to know to within not some want off to bit number Company Alex, want of at lot for were

Alexander Shen

You are.

Thomas Sammons

are. You

Sameer Gulati

GE. over to good. life company and Good, we part really exceeded, these you progress you've to Ross repair you a how of this quickly this able want – your first you aboard if were and came But done some Okay, – your with – and when our know big jumped spreadsheets. off relation what is

this some then of products, call you This way having say, smart times But high position is an word service. quality shareholder, out turned it of And really company TechPrecision I yes with really you guess the has you with is but you not on every is hearing has And every are many even is word honorable you the the and it with I’m coming the around today. numbers. trustworthy focused. operator. only You there when frustration use and because saying way laser

talk this you trust knowing When and now. you things. communicate focus confidence have you there this laser this have just large laser about executing been you a As we and shareholder, I've have and you that how are focus

valuation is the Company. been We it. and you're the started thinking laser of working large and in have this of and I uncertainty. about spot, and communication you. and working. just you Company communicate It's is the will – the kind a But you are appreciate the it's ride, focus. when appreciate way That’s appreciate you were follow The still size your we Thank long for lot I a payout of operate and and

Alexander Shen

Thank you very much.

Operator

Our comes from of proceed your question. next question line Investor. Private the Hardison, John with Please

Unidentified Analyst

Hey, Alex.

said, antisubmarine frigates Just ago, minutes for in built world. few there's a a Navy around going Australian BAE press the they a I to award to XXX $XX release Systems that saw that years, next article, gave billion discussed the the over the XX and be same submarines that

well? you bidding Virginia-class, are on sub-work guys guys up international you the and Are submarines. know I Columbias as on Now the and adds that XX bidding to about

Alexander Shen

not. are We

in focused allow and the on have that Bear States the agreements many things to of UK United the shared. mind, America. are We U.S. be

know than in mix pursuit Ross with UK, But be going would the I not be that I not but or in to suppose didn't the which going earlier. UK don't say are the other I could mix UK, the I to in So as internationally. answer the are parts we seriously

Unidentified Analyst

become Okay. any next of generating the other think could to a and And going I very then would up-listing get to board, has huge helpful it start have I so backlog that people be going shareholders. off of discussions question, you're the OTC cash this bulletin been there lot flow mean and you're I work of regarding to up list and think to NASDAQ?

Alexander Shen

at John, give an this thank time. you for the not question, prepared answer to I'm

a back with respond to this need I comment no at So time.

Unidentified Analyst

Okay.

Alexander Shen

that you – update work we'll I understanding am on that so is understand that. I an an want update,

Unidentified Analyst

Okay.

Alexander Shen

to but one. time. Sammons this just Tom going – this to one, take to at we'll that you’re have going take have is comment cannot I And

Unidentified Analyst

have I a then Tom. And Okay. for question

you covenant, really? back guys existing down debt buy can the shares pay debt or With

Thomas Sammons

Well, you're asking, can we?

Unidentified Analyst

Yes.

Thomas Sammons

Yes, We debt. early people’s we are the a there if to? with we able but with penalty want, can is down one pay debt

Unidentified Analyst

the buyback And are with you to allowed existing shares debt covenants?

Thomas Sammons

but no, be the my loan without cannot. initial that going reaction further My agreements, recollection we debt is would but back through Yes.

Unidentified Analyst

the Okay. right let Tom, somebody into I have I’ll all else now. that’s get Thanks. queue.

Thomas Sammons

Thank of you. Q&A End

Operator

like reached and the Ladies I have would remarks. end And to we question-and-answer turn management session. to gentlemen, of the for the call closing back

Brett Maas

day. Thank call. a on Have us you, joining for everyone great this

Alexander Shen

Thank you.

Operator

conference. This concludes today's

You for time. your this Thank may at disconnect your you lines participation.

TechPrecision (TPCS) 28 Jun 182018 Q4 Earnings call transcript