Last updated on April 16, 2014 at 5:23 EDT

TechPrecision Corporation Reports Full-Year and Fourth Quarter 2013 Financial Results

August 19, 2013

Company Announces Revised Strategy to Achieve Profitability

CENTER VALLEY, Pa., Aug. 19, 2013 /PRNewswire/ — TechPrecision Corporation (OTC Bulletin Board: TPCSE) (“TechPrecision” or “the Company”), an industry leading global manufacturer of precision, large-scale fabricated and machined metal components and tested systems with customers in the alternative energy, medical, nuclear, defense, aerospace and other commercial industries, today reported financial results for the fourth quarter and full-year periods of fiscal year 2013, the periods ended March 31, 2013.

Strategic Update

    --  In June of 2013, the Company developed and began implementing a plan to
        accelerate its return to profitability. Specifically, the plan includes:
        --  A reduction in force of 25 employees or approximately 14% of the
            total workforce
        --  Administrative cost reductions of approximately $1.5 million
            annually, which should begin to be reflected in the second quarter
            and full impact seen in the third quarter
        --  Operational process changes to improve production throughput,
            quality and controls, solidifying the foundation that will support
            profitable growth in the future
        --  Realignment of the organization to focus its activities primarily on
        --  Securing long-term financing that aligns with the Company's business
        --  Modifying executive compensation to align with long term shareholder
            interests, including profitability

“Since taking over as executive chairman on May 13, 2013, I have worked with the Board of Directors and the management team in an effort to stabilize the business with the goal of returning to profitability in fiscal 2014,” commented Leonard Anthony, Chairman of the Board of Directors and Principal Executive Officer. “As a result, we are taking specific steps to more appropriately align our expenses with our current revenue levels through the targeted reduction of $2 to $2.5 million in annualized expenses on a run-rate basis. In the intermediate term, we are refocusing the Company primarily on the activities at Ranor, pursuing production projects that can contribute to our near-term revenues, particularly significant opportunities in the Naval/maritime, nuclear, and precision industrial, segments. We are putting in place a structure that provides accountability for results in each area. We expect this effort will bolster the strong pipeline of medical, nuclear and defense-related business we have in place, and this should accelerate our growth in 2014 and beyond. Simultaneously, we are focused on expanding margins, with an expectation of progressively improving gross margin levels to a targeted 30% over the balance of fiscal 2014.”

Fourth Fiscal Quarter 2013 Summary: Three Months Ended March 31

    --  Net sales increased 64% to $9.9 million compared to $6.1 million in the
        year-ago quarter.
        --  As expected, the fourth quarter benefitted from $2.2 million in
            revenue related to large-scale PolySi chambers for which production
            was extended into the fourth quarter.
    --  TechPrecision's backlog at the end of fiscal 2013 was $16.4 million,
        compared with a $22.4 million backlog at March 31, 2012. The Company's
        backlog as of July 31, 2013 was $19.2 million.
    --  Gross profit was $1.6 million, or 16% gross profit margin, compared to
        gross profit of $1,883, or 0.03% gross profit margin, in the year-ago
        quarter. Contract losses of $1.5 million incurred during the fourth
        quarter of fiscal 2012 on U.S. production impacted the gross margin for
        the period.
    --  Tax expense was $0.7 million in the fourth quarter compared to a tax
        benefit of $1.6 million in the same period one year ago. Tax expense for
        fiscal 2013 is the result of a full valuation allowance recorded during
        the fourth quarter on net tax assets.
    --  The net loss was $(1.1) million for the fourth quarter compared to a net
        loss of ($1.3) million in the prior year fourth quarter.

Fiscal Year 2013 Summary: 12 Months Ended March 31

    --  For the year ended March 31, 2013, net revenue decreased 2% to $32.5
        million compared to $33.3 million in the same period last year.
    --  Gross profit margin was 20% for the year compared to 15% gross profit
        margin in the prior fiscal year.
    --  Loss from operations was $(1.6) million for the year compared to an
        operating loss of ($3.4) million in the prior year.
    --  Tax expense was $0.5 million for fiscal 2013 compared to a tax benefit
        of $1.5 million in the prior year. Tax expense for fiscal 2013 is the
        result of a full valuation allowance recorded during the fourth quarter
        on net tax assets.
    --  Net loss was $(2.4) million for the year compared to a net loss of
        ($2.1) million in the prior year.

Balance Sheet Summary

At March 31, 2013, TechPrecision had working capital of $3.1 million as compared with working capital of $10.2 million at March 31, 2012. As of March 31, 2013, the Company had $3.1 million in cash and cash equivalents compared to $2.8 million at March 31, 2012.

Mr. Anthony stated, “As of our fiscal year end, we were not in compliance with certain financial covenants contained within our debt agreements. As of August 16, 2013, we had yet to reach agreement with our Bank relative to a modification of those covenants. As these events of default were unresolved at the time we filed the Form 10K and the Bank had the right to accelerate the debt upon 60 days written notice, we reclassified all of our debt from long term to short term as of our fiscal year end. In light of this situation and prior debt covenant issues, we have initiated the process of seeking to replace or otherwise refinance our debt arrangements. While we are in the early stages of that process, we believe that based on the collateral available, the reduction of $0.8 million of net debt outstanding achieved during fiscal 2013, the additional $0.5 million of revolver debt paid down during July 2013, and our outlook for a return to profitability, based principally upon cost reductions, we will be successful in securing new debt arrangements.”


As disclosed within the Company’s 12b-25 filing on August 15, 2013, the Company expects to report a net loss of approximately $0.8 million for the quarter ended June 30, 2013. The net loss is based on revenues of approximately $7.0 million as of June 30, 2013. The Company expects to file its Form 10Q for the quarter ended June 30, 2013 as soon as practicable and will host another investor call at that time.

Mr. Anthony stated, “While the challenge resulting from our need to overcome the market downturn on a major solar product line is not yet behind us, we believe that our improved cost structure and our enhanced Ranor operations, supported by our experienced and dedicated workforce, will position us to capitalize on the significant market opportunities that are ahead.”

Teleconference Information

The Company will hold a conference call at 2 p.m. Eastern (U.S.) time on Monday, August 19, 2013. To participate in the live conference call, please dial 1?877?941?2068 five to 10 minutes prior to the scheduled conference call time. International callers should dial 1?480?629?9712. When prompted by the operator, mention Conference Passcode 4635649.

A replay will be available for one week starting on Monday, August 19, 2013, at 5 p.m. Eastern Time. To access the replay, dial 1?877?870?5176 or 1?858?384?5517. When prompted, enter Conference Passcode 4635649.

The call will also be available live by webcast at TechPrecision Corporation’s website, www.techprecision.com, and will also be available over the Internet and accessible at http://public.viavid.com/index.php?id=105751.

About TechPrecision Corporation

TechPrecision Corporation, through its wholly owned subsidiaries, Ranor, Inc., and Wuxi Critical Mechanical Components Co., Ltd., globally manufactures large-scale, metal fabricated and machined precision components and equipment. These products are used in a variety of markets including: alternative energy (Solar and Wind), medical, nuclear, defense, industrial, and aerospace to name a few. TechPrecision’s goal is to be an end-to-end global service provider to its customers by furnishing customized and integrated “turn-key” solutions for completed products requiring custom fabrication and machining, assembly, inspection and testing. To learn more about the Company, please visit the corporate website at http://www.techprecision.com. Information on the Company’s website or any other website does not constitute a part of this press release.

Safe Harbor Statement

This release contains certain “forward-looking statements” relating to the business of the Company and its subsidiary companies. These forward looking statements are often identified by the use of forward-looking terminology such as “believes,” expects” or similar expressions. Such forward looking statements involve known and unknown risks and uncertainties that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. Investors should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including the Company’s ability to generate business from long-term contracts rather than individual purchase orders, its dependence upon a limited number of customers, its ability to successfully bid on projects, and other risks discussed in the company’s periodic reports that are filed with the Securities and Exchange Commission and available on its website (www.sec.gov). All forward-looking statements attributable to the Company or to persons acting on its behalf are expressly qualified in their entirety by these factors other than as required under the securities laws. The Company does not assume a duty to update these forward-looking statements.

– Tables Follow –

                           TECHPRECISION CORPORATION



                                 Three Months ended
                                   March, 31                   Years ended March 31,

                                      2013                 2012     2013                         2012
                                      ----                 ----     ----                         ----

    Net sales                   $9,954,751           $6,079,159            $32,472,919    $33,266,778

    Cost of sales                8,324,088            6,077,276             25,914,345     28,182,584
                                 ---------            ---------             ----------     ----------

    Gross profit                 1,630,663                1,883              6,558,574      5,084,194

     general and
     administrative              1,942,575            2,837,049              8,160,984      8,447,794
                                 ---------            ---------              ---------      ---------

    Loss from
     operations                   (311,912)          (2,835,166)            (1,602,410)    (3,363,600)

     Other income
      (expense)                     (3,001)               2,455                (29,856)        18,818

      expense                      (90,396)             (52,808)              (309,799)      (267,577)

     Interest income                (2,146)               5,313                  2,189         20,035
                                    ------                -----

    Total other
     expense                       (95,543)             (45,050)              (337,196)      (228,724)
                                   -------              -------               --------       --------

    Loss before
     income taxes                 (407,455)          (2,880,216)            (1,939,606)    (3,592,324)

    Income tax
     (benefit)                     707,706           (1,612,089)               472,331     (1,469,218)
                                   -------            ---------                -------      ---------

    Net loss                   $(1,115,161)         $(1,268,127)           $(2,411,937)   $(2,123,106)
                                 =========            =========              =========      =========

    Net loss per
     (basic)                        $(0.06)              $(0.07)                $(0.13)         (0.13)


    Net loss per
     (diluted)                      $(0.06)              $(0.07)                $(0.13)         (0.13)


     average number
     of shares
     (basic)                    19,148,224           17,845,861             19,004,897     16,738,213

     average number
     of shares
     (diluted)                  19,148,224           17,845,861             19,004,897     16,738,213



                                           March 31,              March 31,
                                                2013                   2012
                                            ----------             ----------


    Current assets:

    Cash and cash equivalents                 $3,075,376               $2,823,485

    Accounts receivable, less
     allowance for doubtful accounts
     of $25,010 in 2013 and 2012               4,330,637                4,901,791

    Costs incurred on uncompleted
     contracts, in excess of progress
     billings                                  4,298,293                3,910,026

    Inventories- raw materials                   354,516                  373,544

    Income taxes receivable                      374,030                1,751,169

    Current deferred taxes                       255,765                1,020,208

    Other current assets                       1,578,484                1,486,954
                                               ---------                ---------

       Total current assets                   14,267,101               16,267,177

    Property, plant and equipment, net         7,300,248                7,395,445

    Noncurrent deferred taxes            --                  118,005

    Other noncurrent assets, net         --                  270,630
                                        ---                  -------

       Total assets                          $21,567,349              $24,051,257


    Current liabilities:

    Accounts payable                          $2,537,060               $1,361,611

    Accrued expenses                           1,874,924                2,424,695

    Accrued taxes payable                        232,624                  159,987

    Deferred revenues                            253,813                  799,413

    Short-term debt                              500,000                       --

    Current maturity of long-term debt         5,784,479                1,358,933
                                               ---------                ---------

       Total current liabilities              11,182,900                6,104,639

    Long-term debt, including capital
     leases                                       31,108                5,776,294

    Non-current deferred taxes                   255,765                       --

    Stockholders' Equity:

    Preferred stock- par value $.0001
     per share, 10,000,000 shares
     authorized, of which 9,890,980
     are designated as Series A
     Preferred Stock, with 5,532,998
     and 7,035,982 shares issued and
     outstanding at March 31, 2013 and
     2012, (liquidation preference of
     $1,576,904 and $2,005,254 at
     March 31, 2013 and 2012)

      1,310,206                                1,637,857

    Common stock -par value $.0001 per
     share, authorized, 90,000,000
     shares issued and outstanding,
     19,956,871 shares at March 31,
     2013 and 17,992,177 at March 31,

      1,996                                        1,799

    Additional paid in capital                 5,076,552                4,412,075

    Accumulated other comprehensive
     (loss) income                              (221,418)                (223,584)

    Retained earnings                          3,930,240                6,342,177
                                               ---------                ---------

       Total stockholders' equity             10,097,576               12,170,324
                                              ----------               ----------

       Total liabilities and
        stockholders' equity                 $21,567,349              $24,051,257



                                     Years Ended March 31,

                                 2013                                    2012
                                 ----                                    ----


    Net loss                            $(2,411,937)              $(2,123,106)

    Adjustments to
     reconcile net loss to
     net cash provided by
     (used in) operating

    Depreciation and
     amortization                           846,012                   681,434

    Stock based
     compensation expense                   337,023                   622,245

    Deferred income taxes                   695,762                  (524,173)

    Provision for contract
     losses                                 270,172                   887,458

    Changes in operating
     assets and

    Accounts receivable                     572,786                   683,394

    Costs incurred on
     uncompleted contracts,
     in excess of progress
     billings                              (388,267)               (1,056,174)

    Inventories - raw
     materials                               19,985                   351,236

    Other current assets                    (75,540)               (1,043,732)

    Taxes receivable                      1,824,262                (1,628,720)

    Other noncurrent assets                 212,700                  (171,252)

    Accounts payable                      1,171,600                   237,046

    Accrued expenses                       (822,450)                 (139,844)

    Accrued taxes payable                    72,638                   159,987

    Deferred revenues                      (545,600)                  417,283
                                           --------                   -------

       Net cash provided by
        (used in) operating
        activities                        1,779,146                (2,646,918)


    Purchases of property,
     plant and equipment                   (663,185)               (2,682,341)
                                           --------                 ---------

       Net cash used in
        investing activities               (663,185)               (2,682,341)


    Proceeds from exercised
     stock options                 --                      41,396

    Borrowings of short-
     term debt                              500,000                        --

    Repayment of long-term
     debt                                (1,366,017)               (1,372,637)

    Borrowings of long-
     term debt                     --                   1,918,676
                                  ---                   ---------

       Net cash (used in)
        provided by financing
        activities                         (866,017)                  587,435

    Effect of exchange rate
     on cash and cash
     equivalents                              1,947                    24,309
                                              -----                    ------

    Net increase (decrease)
     in cash and cash
     equivalents                            251,891                (4,717,515)

    Cash and cash
     equivalents, beginning
     of period                            2,823,485                 7,541,000
                                          ---------                 ---------

    Cash and cash
     equivalents, end of
     period                              $3,075,376                $2,823,485
                                         ==========                ==========

    Company Contact:                     Investor Relations Contact:

    Mr. Richard F. Fitzgerald            Hayden IR

    Chief Financial Officer              Brett Maas

    TechPrecision Corporation            Phone: 1-646-536-7331

    Tel: 1-484-693-1702                  Email: brett@haydenir.com

    Email: Fitzgeraldr@techprecision.com Website: www.haydenir.com

    Website: www.techprecision.com

SOURCE TechPrecision Corporation

Source: PR Newswire