TPCS - Earnings call transcript Q4 2019 | TechPrecision Corporation

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Operator

Good day, ladies and gentlemen, and welcome to your TechPrecision Third Quarter 2020 Earnings Call. [Operator Instructions].

At this time, it is my pleasure to turn the floor over to Jeff Stanlis with Hayden IR. Sir, the floor is yours.

Jeff Stanlis

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

projections estimates no February statements. today, TechPrecision assumes as obligation these as revise XX, the update future company's to addition, of In performance management's or to represent XXXX. forward-looking

I'd way, to the to turn Executive of to over out that remarks. like the call Alex Officer, With Chief Shen, Alex? provide opening

Alexander Shen

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

third negative of which, prior for Our curve-related in margins learning and not by the most loss new projects, part, a negatively same the results number in quarter were projects provisions as impacted limited quarter. resulted cost overruns the that on were very

know-how the These fabrication and new excellence technical projects machining. and demonstrate are opportunity complex of to custom an complex

represent point projects new these an business addition, into prospects. entry In new

We cost stabilize expect new projects approach online. other come forward completion, going profitable projects improved and these as margins

reached over backlog months fiscal XX, $XX.X its XXXX, XXXX. of approximately level were X years, in order X increasing at to as sales Our million orders new December the over first $XX booked million highest of

increase flexibility borrowing interest with January our XXXX. December financial going credit equipment In as available available We expense. for to full, cash believe subsequently, and an capital along XXXX, and loan fiscal as future our by in of this our well $X revolver we strong should increased increased pay, providing to million, provide activity, agreement stream order XXXX, used forward in margins backlog, million under a steady profitable $X.X signed our reducing revenue and loan, in capacity

call quarter Tom the us about tell more results. to who I'd financial our over turn third Sammons, will to Tom? now like

Thomas Sammons

for million to customer the year $X.X continue quarter $XXX,XXX XX, referred maturity. general in on quarter the in and charge Cost ended fees. sales mainly higher a potential due in Alex. third to Net by $XX,XXX for in part, projects, expenses quarter losses third ago. the quarter XX, or third same the due, XXXX. $XX,XXX by professional decreased compared million you, primarily increase to XXXX, was to quarter The was amortize Alex. Interest ended Thank December million new $X.X to $X.X in December to certain of quarter, the the the large during administrative compared period as quarterly sales projects increased increases by were for to principal we a expense the Selling, third debt $XX,XXX third

the third for loss Net was $XXX,XXX. quarter

X sales X compared months ended ended the by XXXX, to million X% XX, months decreased the December to XXXX. $XX when from million For XX, December $XX.X net

for of months in cost million to, Gross December or X customer for the $X.X profit were same was sales ago. on primarily, compared charges Our projects. XX, lower certain due a losses million XX.X% $X.X ended XXXX, to the $X.X $XXX,XXX year potential period of million

increased XXXX, XX, expense. approximately decreased by expense which we amortize continue to -- Interest in fees, as a December principal. ended increase debt by to by professional months compensation X most $XX,XXX, in due the for offset expenses decrease $XX,XXX, SG&A again, Total primarily our were

ended of loss months XXXX, months with was December X XXXX. XX, $XXX,XXX net our income December X $XXX,XXX for XX, the the For compared ended net

at activities of provided third the the we million. by sheet, XX, in operating XXXX. of $X.X had Net balance was at Cash the for end XXXX cash in to XX, Moving the X and XXXX. was million ended quarter $X.X capital working months fiscal million million December December $X debt $X.X

from our -- December by in remaining our the equipment. amount In at the million $X in total increase from January January $X to of available basis $X.X to to on signed XX XXXX, loan debt XX, interest decreased rate revolver of off, obligations revolver amount $X.X loan our agreement December mentioned, an million and reduced points. rate million our XXXX, we Alex available As paid we debt million XXXX, on obligation full, at interest payment the $X.X XX, This higher million XXXX. capital under

will back Alex. the I call that, to With turn now over Alex?

Alexander Shen

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

and defense continue industrial new will We other in opportunities and backlog markets beyond. and seek out the XX months to our the in replenish next

for the Q&A. now call open would like I to up

Operator

[Operator first Aaron as ES Warwick Instructions]. from we'll Capital our [ph] And take questioner.

Unidentified Analyst

due You of demonstrate end forward? quarter know-how the did the believe new mentioned things. at these win of some the the you it, this struggles and you some custom going excellence that, technical do that to to business in Wondering,

Alexander Shen

question? you I your question repeat think your -- was can

Unidentified Analyst

Yes.

So the think that complex do learning new demonstrate you and types quarter you machining. to demonstrate you provided forward, here that more sit excellence complex it that going you for if, you you And that mentioned parts this despite some of and of had business earn? And fabrication curve. during technical struggles related type did that I'm be new some you the as said the something would today, opportunity wondering you'll to losses and

Alexander Shen

the projects, part of the new I saying overruns. curve-related of a point. very was That's this cost negative limited first So number learning there's

second are and entry these The demonstrate new point excellence to business point, technical projects an projects they know-how. opportunity into an custom because new represent

Unidentified Analyst

do is, the customer demonstrated And question to my that that future award think you would they you business?

Alexander Shen

and was we Yes. continue I demonstrate, There why that's opportunity an telling you. demonstrate, are to to

it reaffirming is Absolutely, demonstrate? is. it you're Yes, think opportunity an Yes. that yes. to I just

Unidentified Analyst

good. Good,

wondered $XXX over where And Speaking two million before you've you of years. opportunities, just I mentioned with sit now. that the

Alexander Shen

decreased. That has not

Unidentified Analyst

Okay.

you maybe that's over related unlike I other throughout past starts of Can recruiting people little to a a not is just question three million of did to us filings, share the know I people. obviously, looking of Boat Another -- Obviously, what off looking most Electric pick in people. the contractors, would thousands and this you with to lot industry actualization. whatever opportunity years at the XXX the Obviously, that, have or you're your was I Maybe this signing to a human come bit talent? $XXX the for this big can't there you plans more you concern number terms skilled resources. And something require kind through more just streets. got X quarter. when are going think of anybody up about is work,

Alexander Shen

to would the probably this an on strategy best competitors line not our talking I that very call will and open idea. -- you be tell about public on these that things revealing our

Unidentified Analyst

you that it go ahead, you But go safe is Okay. -- to ahead. say --

Alexander Shen

point I to shareholders our Whether I would all reassure be flex executing equal the so resources to will I down the or goes will properly. to opportunity am also opportunity, has against listeners revenue, manage that's of capable our million ourselves we appropriately demand. that we're looking all to clear. fully like just is decreased out able goes not revenue and $XXX That that not up, forward.

Unidentified Analyst

activity broken, EBITDA I'll like sits call Corporation, Said your I the impossible is and people There's was back a the out environment mention, of questions. industry January, in QX Graham quote Okay. right unless M&A the who paying now. there on is stock which is an forward queue like late. it's from forward people they basically are and pay anything XXx to auction-type in that about business of seeing that XXx that the an wanted been exact them. defense as have their One late almost EBITDA, for lot other noted thing get that where

So the -- the -- XXx and not trailing, mean forwards. actually, is that's I on on

there are wondered, kicking guys? tires, acquiring just this that the in you interest interest So you people seeing out

Alexander Shen

Tom?

Thomas Sammons

think don't that's answer a at point. can this really I question we

Operator

Instructions]. with [Operator to move Partners. next Ross Investment We'll ARS Taylor

Ross Taylor

XX/XX? has grown Alex, since backlog

Alexander Shen

I want say, to yes.

Ross Taylor

Okay.

yes, say -- Alex. be can You you can

Okay.

now to I'm So we'll the organization in the a we'll question. And that take associated used you're overruns next phrase with. to any move yes. really cost not as

done, hurdles new bit from said one. projects the give the two you at side make occurred background will like looking quarters, last learning prior you the said to P&L away that on curve up multiple little you hit the expect the and more and do were? efforts? and the can back total the business us of that when So these of than you because all that win in Or what were these is a efforts? the these And two technological And and

Alexander Shen

part So than numbers cost they that's that not all overruns. from number. make just the the That learning we of was quarter. the trying understood. cost previous -- It part that overruns X In overruns different to numbers causing same were learning-curve continuous what set was case. a set I on were of the has more sure quarters, cost related. curve-related That's coming It's a the different wasn't part

two best make understand difficulty. we've to. quarters. forward? I of to always part the what cost representing, there's So our these how going get be, expect and moving that's estimates the fully we never of I different back make possible Will it are -- to in sets areas run able to myself the and the into arms built different unexpected much around numbers our is And -- we be before, it up

Ross Taylor

before. was, you that also then new And which made are next question, haven't just these my addressed parts Okay. then you

X or that either would this not carriers? on on Virginia So X you be new did Block Block on have business

Alexander Shen

Block before -- carriers. I have I X before, for Virginia have Virginia. didn't or that Columbia That didn't class

Ross Taylor

Carriers?

Alexander Shen

three classes Yes, of Yes. boats. the

Ross Taylor

in debt With Okay. cash...

Alexander Shen

very really Unfortunately, cost "hmm, there to was not... we So we this exciting before," really -- there that's and this, built is some an pretty difficulties, ran do that caused demonstrate work. which was exciting, that's because difficult it into, opportunity know overrun, haven't to how pretty

Ross Taylor

of end, successfully the build now said done, have it. it But correct? is able you going key, build all did was to and an were how to the you understanding forward, build and it in When you

Thomas Sammons

It was done correct. well. Yes,

Alexander Shen

actually the our probably for so... like that's to And It's only say key. something critical as pretty me of a CFO

Ross Taylor

appreciate his I help.

we're you're setting seeing a the class, seeing time to looking about So Block projects, long forward, been the come It's X to fruition. million, Virginia we're starting as this these we're seeing beginning you see, talked $XXX-plus still out, Columbia way to waiting.

and have is previous of expectations boats when think gotten behind ways construction. frustrated, running on the particular, the in Block the well be would I X, people very under Virginia

that going seem a into the to all it, and we're how forward. of or generating start free would generate to Looking you cash free it returning cash kind Have that, as or to pretty cusp significant roll of we're Board you some flow, using discussed about shareholders? going you that anticipate at flow

Thomas Sammons

not. No, we have

our You of to see some debt. down cash the we can pay used

Ross Taylor

of size -- Board about it multiple that. want in the is comments level multiple made a previous you having to when given below quite But a go debt of valuation a suboptimal a there's the debt X Right. resources, debt as number TPCS' of now call shares don't a or a to companies with place as, debt and X for by company for a me it honestly, on it marketplace, multiple is, strike public utilization you're of of the would minus particularly a where becomes representative because

So space. frenzy aggressive which was it potentially a or call, develop flow, shareholders dividend make referenced it as there's be free I valuations why the here, opportunity, why would are about cash would return occurring space through they generated so which some a through is we in feeding this point Graham as the begin and being high in of bit talked buybacks. and suggest would that, at the the to in on returned you that this decade-long a We is cash sense, share value to programs, here, buybacks because earlier, cash think either

that in be would Away talk. boats. Fleet submarine I strike it and there Virginia find days speech from in in significantly lot did modern me most trying recently minute the not waters because quality argument find of publications to would increase the their Have contested a anything compelling submarine spent in build-out does to the and North really It Block needed left the just it of to highlighted a Recently, idea U.S. defense several that would the activity improved the the in Soviet out the the it fleet was increase you X of that, those as understand a of the in the that that our and to there said significant port the capabilities there slowing vastly for into boats? Atlantic of feel, Commander Atlantic seen XX increasing want the That indicate get was Xnd submarines XX the and Soviet that. to be any the X days. for Block

Alexander Shen

and stuff available to there's out direct public I all I guess. of sector, can there, in kinds you the only what's

Ross Taylor

I it's comments the to early minute was the harbor. naval the I commander of because of Yes. Fleet, I been engaged indicated to U.S. the left heard was shocked has needed Xnd war 'XXs, since world the Commander second saying, actually they by prepared when days be that be I think the that ships a

of this, you guys we you you're -- Alex, all me you three said were you haven't Are at Looking ago, as today it excited. more strikes when excited than months last spoke? that

Alexander Shen

is get well. excited? level. my pretty it how don't know seriously, was time opportunity -- high excellence the think going I high And It's we pretty demonstrate same Am spoke. excitement's I more can the last our I to higher. at

of to So I'm level excitement. high maintain able the

Ross Taylor

you're that what seeing -- is... -- that would is and Ranor I assume you're So

Alexander Shen

trying that we we level had the loss opportunities trying maintain and to cost I'm becoming excitement that of lost not to am margins, very -- but my money. had not to true. I'm overruns downplay excited negative fact be these Ross, that, because real downplay are to I provisions, able not had we I'm trying we and to

Ross Taylor

which, a this live fine a Yes. in that if not in into business down low and not -- of millions quite I it's you pounding be really as guys it's making -- -- honestly, that, I road. making are largest make care price building systems, into getting the it's components that the tolerances to think I it vessels, And your complex that's expect to the And lets exceptionally exceptionally level out you're most lose quite the or world. game, high doing it shareholder, if It's you're $XXX,XXX isn't Alex, the me, the don't cornflakes. widgets, able hostile to literally, you credibly with -- go you environment

get can is and So them, a the you can revenue to losses you that things, future into where fact make you can as investor. these learn, on turn can that you those the trade-off make contain streams, willing I'm an profits

Alexander Shen

you. Thank

Ross Taylor

are see -- it you But you of at say, and me, that of looking excited looking as you. you strikes front the at all that, in with yes, opportunities

to We I'd for the of space things be come making? where should working are be that fruition to that all these in fruition it Is to you've starting we that safe seems couple a years. the assumption been in on see -- an last

Alexander Shen

so Yes. this and getting That's It's just closer to clunky timing be what... is hard predict. Yes, it absolutely. should closer,

Ross Taylor

fashion. potential one you versus on that produce X on -- to you that resources. Is that? correct? assume with resources, are -- it? at this looking at about I able ask space. to question over that you in the been earlier years, And and before is the human asked going businesses? of the expect this question was very believe, can you it you you're have pass I And facilities that X/X which specifically the But I'm pick Is up, I of of could everything Is capacity hard to think some don't like business $XXX capacity from I portion of and When I determine hand. it? what And don't others, million half that it to last I've is -- answer of potential what affirmative level all currently these in to But it it's your is

Alexander Shen

of than would categorize first number. a on type depends Because I it well, resource it it? what of different type all, that's set of one part some of -- How is. part further another number can Yes, of uses to produce really correct. any it

dependent it the handle the part and that think can part number. highly the I and... situation, So of But part characteristics on of the is on some we as is uptick number the of yes,

Ross Taylor

expected the you because uptake going what get I be need your amount you we from what answer XX safe you you it If -- projections idea to what you be get, Would next see do not Do have do your an that anything? it. it you what know asking to say, to think handle is, could won't able being you're to of I'm and business yourself over months? you are. But the --

additional, that business you business, significant to capital expenditure you need If get can without additional either that people? or handle the in significant bring

Alexander Shen

I'm answer I'll is of at, have investment most and The so of some combination that direct to the answer. doesn't. is correct of stuff do a it requires it think, things, I some the looking -- some

manpower will out. highly characteristics on parts. CapEx it to depends numbers they and dependent going addition happens really X. be it part the The the those releases That's addition how and and of When come actually on be addition the headcount needed. not So is

think I the answering question. I'm

Ross Taylor

question Yes. not looking space like. at different you're the as It's take you're you human up -- of different you're floor and to an not widgets, because resources and things amounts take awkward things I said, up different different use -- pounding resources out

So in I capital And capacity first to idea that that forward time, point this you going is be you're able that move question, to what should that, somewhat are company. additional has but a need forward. that. I do of have assume lot resources. And then margins improve do have the you to bring go expect needed as in-house, get, you you at equipment trying fully to the excess very the utilize would to profitability which probably to as we to you -- going the understand my get of will which assumption been it's at a dampening of that -- in operating complicated you'll capacity with you

correct? equipment in of invested fair amount You in capital years, a recent money

Alexander Shen

some more? in in Yes. probable. investing equipment Will we highly capital It's years? Yes. invested be recent We've

Ross Taylor

business? as win more invest you you But

Alexander Shen

yes. it hard less, to -- the or to desk otherwise. CFO's He's here. parsimonious going More That's across be get

Operator

move And Hardison, to next, John we'll Private Investor. a

John Hardison

past, and that we about prime know X.X welding From the you guys Navy problems public in contractor years have welding information the missile not issues. had tubes and ago, know, on I

probably I Electric Boat So appropriate they all procedures. Navy a that until work would put quality could add building hold think and control the lengthy tube on missile

now this ahead will go getting So it think is your I'd to work increase and dramatically also cleared workflow going forward. that

additional can Alex, any us you give on So that? color

Alexander Shen

have Ranor that Ranor, The that have That's same you of problems specific encountered the have doesn't Thank subsidiary, -- very were a pretty encountered. that John. Ranor question, outside problems much. doesn't been our

offending are we So problem-free in the areas.

So as I your we opportunity to properly to secure answer some that than less. There's orders. think is question in again, are gets demand more released of position those

John Hardison

Did though? it it down slow

Alexander Shen

yes. less, or More

Operator

conclude that And I'll remarks. question-and-answer for does to turn back any for over our closing today. session management it

Alexander Shen

your attendance. great day. for everyone, you, Thank Have a

Operator

And that for teleconference. conclude thank your today's We does you participation.

disconnect this lines your great may time, and You at a have day.

TechPrecision (TPCS) 13 Feb 202019 Q4 Earnings call transcript