TPCS - Earnings call transcript Q3 2022 | TechPrecision Corporation

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Operator

Good afternoon, ladies and gentlemen, and welcome to TechPrecision Corporation Fiscal 2022 Third Quarter Financial Results. At this time, all participants have been placed on a listen-only mode. It is now my pleasure to turn the floor over to your host, Brett Maas with 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

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

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

Alex Shen

Thank Good afternoon joining Thank to for you. you us. everyone.

$XX we quarter of secured Furthermore, increased December quarter September third is XX, after a have orders new for December million million strong over year We the XXXX. XXXX sales This orders. The additional from our capturing $XX.X $XX.X was significantly to up quarter backlog fiscal end. at at XX, XXXX. of million sales

very of newly STADCO quarter manufacturing our of third time. Our acquired financial entire results the for activity for fiscal XXXX one quarter include the subsidiary from first

recognized we of addition the additional revenue. STADCO, With

the which selling, administrative, due Thanksgiving reduced significantly strong higher strong. Fiscal interest the third expense. holidays. Christmas These financial holidays by and year given dampened mix we third an to orders. Concluding contributed is business We was also our and and always and to statements, and both my margins revenue added absorbed are And to lower by by project our lower hours are labor overhead. In performance general, prospects margins. production quarter new challenging opening the unabsorbed in prospects unfavorable XXXX the our impacted quarter that costs general, business additional sales believe increase significant evidenced

see to and call profitability Tom. I'd continue our We expect to Tom improved the CFO, future quarter third like Sammons, fiscal review quarters. the growth to revenue in with turn our over XXXX to of results.

Tom Sammons

a a XXXX our Alex. the in Net $X.X quarter to the you, year when an increase revenue. million fiscal compared decrease same of Thank year precision quarter in We of a sales third as were ago which more we revenue XX% industrial than higher offset for in STADCO or added revenue. markets, recorded quarter defense full

in the quarter from to orders third resulting was a compared a quarter a strong Our new quarter defense XX.X% decrease Gross compared gross the profit our after sales backlog gross largely quarter of defense year. XXXX, remains X.X% are in of captured same contractors. the prime last $X a of Costs in in same $XXX,XXX profit million to fiscal of as and year profit $XXX,XXX, of year ago. when were

and projects We an expense quarter increased acquisition. profit previously of the STADCO, and increase travel-related advisory STADCO incurred above, outside in SG&A due to due $XXX,XXX the expenses approximately costs. un additional gross an noted the one-time cost a to overhead decline and increased $XXX,XXX. of and was addition mix of unfavorable in labor primarily was to Alex -absorbed of by As higher

STADCO, to the period. period fund $XX,XXX prior as new and added quarter expense Our to in to the the year increased Interest – prior in operating $X.X to $XX,XXX loss quarter, $XX,XXX million acquire loss is of first debt operating from compared same we same to operations. of year an full balance the sheet

associated of XX% third we sales As in XX.X% last four above, same of loss recorded period ago. expenses. $XX.X ended the with $X.X incurred of or XXXX and $X.X These million SG&A $XXX,XXX fiscal acquisition period million one-time million or the ago. in result higher of $XXX,XXX included XXXX, Interest increased nine year-over-year the a for than interest XXXX. $XXX,XXX. same year average net expenses Gross million to Net loss December costs related with the the debt was nine approximately a Operating $X.X year in XX, levels of expense $X.X quarter. a month profit compared higher to Stadco which by a were addition nine higher approximately we was operating period expense fiscal were compared the XX% XX.X% the STADCO, months or as million month income year. months by over increased

gain one-time from Paycheck $X.X May XXXX. We of non-taxable of million Protection also in realized a of the Program loan forgiveness our

income XX, net posted the December period. net we nine prior-year compared a result, the ended months XXXX, in to of $XXX,XXX income $XXX,XXX for a of As

common cash of that debt. Moving million same compared from onto during the used new We in we $XXX,XXX and of sheet, the to the our new amount business and an acquisition. a sourced year million most period activities stock sale for included cash Investing operating operating balance activities payment ago. of $X.X flows of $X.X cash outflow

XX, increase I was XXXX. will December XX, increase to December compared than $X.X the XXXX, at from capital $X.X offset higher liabilities back to over we're was assets. XXXX XXXX, at Working XXXX. million March -- XX, current XXXX Alex. million to than more balance million debt Cash current Our With decreased at March that, $X.X the in at now million XX, call $X.X turn the at in March $XXX,XXX total million on $X.X September XX, reported at XX, as December

Alex Shen

Stadco Ranor manufacturing It as has current Stallion Tom, supplier CH-XXK the Overall, encouraged is to of heavy-lift Defense by be for opportunities sector, submarine prime the our STADCO significant been the in military United defense subsidiary. its its before increasing for future meaningful thank high several encouraged, you. the King A both and commercial in military in CH-XXE honored new growing increase specifically CH-XX and to and through Naval key the very the the all we our through questions. TechPrecision industry continue the Sikorsky and a and large programs, for profitability subsidiary States Industry, very about subsidiary evidenced components is serve proud supplier our I'm orders STADCO in a in years. a manufacturing of prospects our new take Ranor sales for critical on aircraft revenue words backlog, we're quarters. we and to by critical subsidiaries, Stadco see XX over few helicopter. the parts helicopter and continues of flight supplier model, parts profile aircraft and

the Sikorsky Martin XXXX of only capabilities Corps U.S. from is lifter vehicles, heavy-lift U.S. heavy-lift heavy in celebrated that me helicopter equipment, is Let center provide CH-XXK the is Connecticut Lockheed and helicopter will region. in in built some lift its DOD Corps. transport helicopter expeditionary helicopter. be Marine lift rotary Marine times September the support Connecticut The has through new the XXXX, production quote heavy further will In is other in that of Marine The exceed inland wing production will distributed beyond. to conduct This CH-XXK sea-based the a first to publicly Stratford, a CH-XXK three the mission to that roll-off the CH-XXK CH-XXK its line. and all of immediately platforms. operations, the heavy-lift support critical XXX-unit U.S. deep sea-based company The the remain assault facts Indo-Pacific will This personnel program predecessor. a long-range operations first of armored production, capability part delivered Corps. heavy the available the aircraft helicopter for to CH-XX only about Sikorsky and record It of lift

Ministry confirmed part enduring military a obtained CH-XXK military Israeli Israel. customers. partnership achieve December on the Sikorsky same four to Systems a do King for partnerships a more lift the Sikorsky billion the heavy And option subsidiaries Defense CH-XXE, Command and deep $X.X X a of as of package. meaning, our aims the contract an two, $XXX has sales After understanding with our addition, mission, a LRIP with U.S. In of years acquire the secure King one, during deliver from XX, of U.S. STADCO. s has buy Air and of foreign sales to million XX six Stallions Helicopter TechPrecision with modification same heavy-lift manufacture to supporting through foreign to Marine Stallion Naval and mission. Lot understanding XX XXXX, the deal Ranor and Similarly, Corps. The deep

to I allowed the discuss environment to confidentiality, the such, can can about saying which are limits Please is conduct am limits that line preclude discuss not and sometimes for questions, these business. we Operator, work speaking that again operating in change. not that our understand from industries requirements might are to company there and those sensitive I most a many Finally, of highly As on my we as discuss based reminder fields publicly in that us things customer what that a please. we in real do open which

Operator

gentlemen, and Your from [Operator from ARS is coming questions. question for now floor Ross Taylor the Ladies Certainly. Partners. first is open Instructions] Investment

Your live. line is

Ross Taylor

integration great and on and Alex backlog first, really beginning congratulations the the Well, much. of STADCO. very you Thank the team, of growth the

I of it the not huge it both run. how understand, are transformational of stock home the of think in sure runs I home the and I'm your action, that most those really market spite huge is I in and investors think steps quite business. But really think, a is. transformational of

average projects was caused to mix release lower projects it here your was return to normal wanted the an than run about and of whether that new than them quarter. with lower you just give the --that us is first mentioned whether What it about operating that unfavorable operating specific those impacted margins? was Can or you I what business So early a off margin? lower that understanding in talked that margins projects, carried start

Alex Shen

together. answer would numbers, question think both specific it were numbers and like I first that the of that on us on was of part part was builds. It mostly units to

Ross Taylor

the Okay. it thought probably was is Which case. I what

Alex Shen

question. the want think add you answers Tom, else? did I that to first anything

Tom Sammons

had not items we ever of No, that's that build before. projects that all can were I most say that these

us, were new that project and final been that still last said. from on working had we're to they products one So

Alex Shen

That one specific one, yes.

Ross Taylor

-- comment a that's And

Alex Shen

from put other to that to impact This an There's also -- into us, going and the but level. fatigued are things it's and contact, but challenging, Christmas Thanksgiving like there of be is are sound specifically a denied cannot some itself very kind hard not impact together was the and excuse, and this includes COVID to impact contacting. November challenging with December, couple crashed all people The quarter getting human that human which holidays. more

was I COVID think and there more this contact certainly time contact the during increased.

though as So some there an about even like impact don't of for COVID I well, kind is everything, we worldwide. COVID; talk certainly don't to there was Its blame impact. which,

we that and want So state move just on. to

Ross Taylor

are -- future returns. manufacturing should a products, to you've would first numbers, And made you regard the that since learning then curve time generate with and higher part these have the first one the run expect first that

Alex Shen

while, Our when has over in The gets again. stumble expectation by and over better is that. mostly them our make make we that and non-conforming but do products a humans like been and large Tom? experience once it

Tom Sammons

so of would anyway. short are someone run, Most them just Yeah. disappear

Alex Shen

Right.

Ross Taylor

drag guys I tend point, that at as is Columbia, do continuing the continuing resolution. -- Is Yeah. look CH-XX. some believe to in a under you you Do fashion? to having -- four you at and With act programs, Virginia still major government at federal operating to XX this a federal think you as regard

Alex Shen

To not down it's be said the such the sync. honest, Having It's not no the sub-contracting I all correlation vendor as coming and not Ranor just don't connection. it's to the timing and is see STADCO. base in way immediate exactly that,

Ross Taylor

-- on primed in on to that allocating Got far conference one were resources, year, you. And of over Navy, this basically particularly build earlier here Virginia as to new indicated business any The run focus I've they it's Class catch primed -- been they needed hiring running at the the Virginia. they pace Columbia been their as going on to at to seen were were be the Virginia Virginia Have pace you running you to the people going or expected up is impact new related at? to -- asking the has they reading, calls people. Virginia because

Alex Shen

made there has when the been two on think I overall, public. slowdown look build that we bottleneck a at Virginia past Class has years, interruptions been

that and has impacted I think down impact the flowed the throughout chain. really supply COVID shipyards the

Ross Taylor

will its they for that believe Virginia an non-nuclear Navy deterrent know you think not situation build effort I go It early we're actually Ohio-class, that up the carriers strategic a I in its the Crimea make we would that Russians lose I or going are life Malta a that in cruise volley to this I lose substantial and boats, for basically yet what the for if that the they one seem on demonstrate see three-year missile in noticed that portion volley where forward I building will Virginia boats time to U.S. me Those has to was but to of into U.S.. to call surface. to sent and it's neighborhood. three boats the year, a the do of at a Basically, that noticed fact push boats? very the point have interesting, gotten system. Ohio-class it limited in

Alex Shen

I Do I believe? think know I my is, don't it honest -- it. see believe I I'll what opinion when

Ross Taylor

Okay. they if a be for Would did it you? problem operationally that

Alex Shen

I love that to would have problem.

Ross Taylor

Okay.

Alex Shen

have would absolutely love that I problem. to

though in year, per boats Our builds might more. build with the our is two once not total build sequence sync leaking completely

Ross Taylor

Right.

Alex Shen

interested we're We're as about revenue as Ranor but were but and can we talking much interested much -- in and STADCO as profitability getting out we're and interested report, everything can. and both revenue specific, the managing while and not timing in making in our we so much Ranor

Ross Taylor

flow point new meaningful in Columbia from business Are yet? Class a this Okay. you at backlog way seeing flow, the

Alex Shen

next carefully this to answer hold I question, on so the don't the button by get you question. want I

I have of Columbia on for However, Class flow degradation no business sure.

Ross Taylor

None you non-linear and do would relationship think, have kind relationship build or as for Virginia? one sure do the you same to in of

Alex Shen

So blocks X seems The five from on cycle and years and X, and there fact known Class. off build the Virginia X, block very Columbia build that fit. X. Class different volts Virginia are X, currently going; The much class, XX the XX longer and into it's that from We're to every is X. boats a finishing keep

lot lot number different more continuous So giant it's class a for big is X one X; submarine. we're They production The On some Virginia items, -- type of not is boats Columbia of buy There's class one more a behavior. ones. next. one than and more on on our submarine. we're do

Ross Taylor

for Virginia Is Okay. business Ohio? better you than

Alex Shen

depends. it think I Better?

Ross Taylor

standpoint, and thinking I'm of operating margins. dollars sales it investor from of an

Alex Shen

strategic need and tactical a shipyards. need of relationship shipyards, mix I to the in enduring an we be the do deployment order think we so strategic we with from have both a assets, able of supplier to can to both to be two both a that

say I are that equal. So would they

Ross Taylor

Okay.

DO run XX I you if rate? On year. Sikorsky program? that that doing the know up side, a frames think do looking they're yet to on STADCO run XX to up you at to know they're rate

Alex Shen

a low can going so production you initial I still -- low We're rate. that knowledge public the rate tell is through information

Ross Taylor

XX-year I which at time, ISIS what they'd abandoned stage. then going? XX or as the leader, -- years expensive looking at to have they this actually another do you you raid think thing talking having in for is that needs are it. effectively CH-XXK [Indiscernible] there, you -- XX, guys XX the been theater me are at basically have interesting when to the the add you're at looking so about -- on to it's if program sales was rate, a five looks end We're run it could fairly that low this helicopter gets when had It rate you to you're we're we to up behind. years Is like U.S. at which they get leave actually at and might foreign satisfy is a the that at think

Alex Shen

some analysis Well, double-digits it's I Tom for did sure. think and in

Ross Taylor

model, end And realistic I build I've million low to to for When per to value of airframe the that a seen numbers airframe. number $Xmillion various per a attached number use? of guys you $X.X is

Alex Shen

tell Ross? it to think that, don't up ever We you things I we right you. like leave

Ross Taylor

to ask. allowed I'm

Tom Sammons

Absolutely.

Ross Taylor

Okay.

totally was though. they're The probably there as pretty also on it move first really I'm You tell getting wrong, which we'll you I if me to and place, on until noticed said, guys in the was interesting me tells that. then that CH-XX order of healthy on often you not their for or me XXXX, there's aircraft book next four business a years. the five Israeli

be Es comfortable on their Or CH-XX operating and level, kind business? of ramp that you're they assume going relationship that between in to the and the something margins what long on would I you you you're CH-XX's, the aggressive getting that at where meaningfully to get -- point. given operating pretty Israel whatever to at of make a us So use Are how we'd does the of take it see to them you for where nature reasonable because this stand think rate you run sustainable, the margin?

Alex Shen

yet. I Not Am comfortable?

Ross Taylor

Okay.

Alex Shen

Look, turn around.

with little We out when be a pretty we think the we're forward woods will of bit.

will everybody We keep informed.

right are the the in turnaround. middle We of

Ross Taylor

seems also between part of noticed a to this -- great. your building interesting I That to even went questions. approved F-XXEX, The EXs year sale additional was gives it potential of of but F-XX that be more production to which it at two meaningful add XX business and first And that was for thought appears would your [Indiscernible] market of for that day the them the it I EX, would XX overseas EX. the so it about a much investors' years about we're airframes the understanding willing me it. they're down regard of which stock seem it life bigger to some the looking or the going the the annually, sell Indonesia, realities a with strikes announced, U.S. your if U.S. on run, U.S. the not supplier, the defense that XX would XX there's but to be It same dislocation the Indonesia's been tier as

Ross Taylor

did, if run expected sales potential? have foreign any about substantial whether is that had and those or you it could conversations to aircraft would a Have program the increase, supply rate whether you

Alex Shen

we my we the that, do to these know have think to attempt I you question, have had conversations. I first me, have So job. conversation?

tell I then? I orders that some think that. for you right be we can't like about tend a well, at Well, of it okay, back telling. some to stuff how way gets saying ask redirected would me of then

Ross Taylor

you're Yes. think And a what what that thing that to it's you're doing. built be honestly, I hard from doing little for without program, get for to

with increase need And run to to the think I to need. to about that they pretty to the that airframe. you fulfill ability it so that would seem are central they want your or need going rate, extend much sense, if -- program, a I it's talk

can you While in wait areas? we a for guys? other you thoughts for on What that, quick space? do the of comment What's opportunity give see you

Alex Shen

to not there opportunity. some has be sure I'm

Ross Taylor

STADCO, worked with You've of the in the space. Are of players you some worked in at with time? in the past them point in the past with you've working this any

Alex Shen

believe you. said Tom I Yes. that to

Ross Taylor

this has question is And you -- involved perhaps Thank STADCO in of one that? then of flying aircraft. built Are I'll got model, actually, with than two questions I the it. pass more you. one a next-gen fighter Lockheed after last

Alex Shen

sorry. this down, line questioning shut to need I of

Ross Taylor

Thank the question. you, you've answered

I'll next going Okay, ask Then better let someone B-XX. getting coming in at to answered. either. else questions have question you the a because was answer and my I'll I won't shot leave it

Alex Shen

Thank you, Ross.

Operator

question Breakout is next from Investors. Aaron from Instructions] Warwick coming [Operator Your

live. is line Your

Aaron Warwick

the I with which congratulations is for I waiting taking guys, patiently Hey backlog, know for and been thanks just call. you've on to this. that. really start the outstanding want

September and that. $XX so of is Some but now; the And want correctly. I another backlog up from quarter on sure million not million -- XXth to X make that just to between the us me I'm is what sounds and like understanding congratulations quarter? I'm after patient, It $XX

Alex Shen

the the to $XX million -- quarter, Definitely million $XX orders. the are over nine

and some we that at by chip shipping As revenue other get items. we recognizing them, away

Aaron Warwick

what see you're I saying.

Alex Shen

backlog our point. that on know don't [Indiscernible]. ends I'm Yeah. We know this this where out I at quarter. around

Aaron Warwick

Sure.

Alex Shen

We [Indiscernible]. started with the

Aaron Warwick

could've you've as Nonetheless, it's you worked work, impressive got through well. and plus some of then $X the million backlog been that that

medical on really So is, still number. on status that of side. of One thing recently haven't the heard medical Are that. What's anything whatever it much in is the that? impressive involved you we Congratulations about do some you the stuff?

Alex Shen

carefully I we to think can single talking try avoid talk centric. about Defense things I we've tell about try So avoided, you - to customers are to we way. and that only,

Aaron Warwick

Okay.

you've work is And to many the Looking so us unfavorable general, forth that and things beyond, some that talked you've, out really looking told you've difficult rolling, through STADCO. in XXXX, that quarter still QX into with you How at for Are of about future. what you just margins? these around got But expecting contracts for up you. you've and it, when say and having XX-XX% XXXX expectation are are get before? a

Alex Shen

done ever expect. we definite expectations have think Tom that? what you don't numbers we I tell our with we

Tom Sammons

talked to. done like what we We obviously historically, about would and we've

This quarter range that we in the obviously want. not was

Alex Shen

not. Absolutely

Tom Sammons

I you get were ranges back that mean to prior year. to similar the If

Aaron Warwick

in Sure. maybe target though And what's general? have mind just in you the that

Alex Shen

don't volume. I business specific the general, Depends target. and have a the on In

Aaron Warwick

what percentage is Stadco. then -- that backlog. Like reno Okay. to is of wise of part what what back the it And part

Alex Shen

just not that new I disclosed orders backlog in the tell will entities. for the company. coming both you We've are by

Aaron Warwick

you. Excellent. guys. Ross it. Appreciate Thank Thank well. Appreciate with gave you, color as the you all

Alex Shen

Thank you.

Tom Sammons

Aaron. you, Thank

Operator

That our to Please go the closing Thank I ahead. concludes conference session. host will now for our hand you. Q&A back remarks.

Brett Maas

Have Thank great you, everyone. a day.

Tom Sammons

you. Thank

Operator

event. Thank Ladies concludes today's This you. gentlemen. and

have may time at this you and disconnect participation. wonderful a day. for You Thank your

TechPrecision (TPCS) 18 Feb 222022 Q3 Earnings call transcript