TechPrecision .(US:TPCS)2023-11-20 21:41Financial Performance - Consolidated net sales for the three months ended September 30, 2023, were $7.97 million, a decrease of 6% compared to $8.52 million for the same period in 2022[103] - Ranor's net sales were $4.5 million, down $0.4 million or 9% year-over-year, primarily due to a different mix of products and supply chain impacts[106] - Stadco's net sales were $3.6 million, a slight increase of 1% compared to $3.59 million in the prior year, with mixed performance across different customer segments[107] - Consolidated net sales for the six months ended September 30, 2023, were $15.3 million, a decrease of 2% compared to $15.6 million for the same period in 2022[127] - Ranor's net sales decreased by $0.7 million, or 7%, to $8.9 million, while Stadco's net sales increased by $0.4 million, or 8%, to $6.3 million[128][129] Cost and Profitability - Consolidated cost of sales increased by 2% to $6.93 million for the three months ended September 30, 2023, compared to $6.78 million in the same period last year[109] - Gross profit decreased by $0.7 million or 41%, with a gross margin of 13% for the three months ended September 30, 2023, down from 20.4% in the prior year[109] - Ranor's gross profit fell by $1.0 million or 48% due to lower revenue and a less favorable project mix[110] - Consolidated gross profit for the six months ended September 30, 2023, was $1.7 million, a decrease of $0.8 million, or 32%, compared to $2.6 million in the prior year[130] Operating Performance - Operating loss for the three months ended September 30, 2023, was $0.6 million, compared to an operating loss of $0.1 million in the same period last year[117] - Ranor's operating income decreased by $1.4 million, or 48%, to $1.5 million, while Stadco's operating loss narrowed by $987,000, or 45%, to $1.2 million[137] - For the six months ended September 30, 2023, the company reported an operating loss of $1.2 million, which is $0.5 million higher than the operating loss for the same period in 2022[140] Net Income and Loss - The company recorded a net loss of $1.1 million, or $0.12 per share, compared to a net loss of $0.1 million, or $0.01 per share for the same period in 2022[148] - Net loss for the three months ended September 30, 2023, was $0.5 million, compared to a net income of $0.4 million in the same period of 2022[182] Tax and Other Income - The company recorded a tax benefit of $176,698 for the three months ended September 30, 2023, compared to a tax expense of $135,509 in the same period last year[122] - The company recorded a tax benefit of $323,128 for the six months ended September 30, 2023, compared to a tax benefit of $38,205 for the same period in 2022[146] - Other income (expense), net for the three months ended September 30, 2023, was $40,875, a decrease of 44% compared to $73,561 in the prior year[119] Backlog and Orders - The defense backlog remains strong, with new orders related to U.S. Navy and Marine Corps programs continuing to flow from existing customers[105] - The backlog at Ranor as of September 30, 2023, was $19.1 million, while Stadco's backlog was $25.5 million[128][129] Liquidity and Debt - Total available liquidity as of September 30, 2023, was $3.2 million, consisting of $0.1 million in cash and approximately $3.1 million in undrawn capacity under the Revolver Loan[150] - Working capital was negative at $(740,000) as of September 30, 2023, a decrease of $6.3 million from $5.6 million at March 31, 2023[158] - Long-term debt obligations totaled $7.1 million, classified as current due to potential covenant violations[181] - The company had $7.1 million outstanding under the amended loan agreement with Berkshire Bank as of September 30, 2023[151] Capital Expenditures and Investments - The company invested $2.7 million in new factory machinery and equipment for the six months ended September 30, 2023, primarily for contract project work[162] Interest and Expenses - Interest expense increased by 46% to $205,164 for the six months ended September 30, 2023, compared to $140,628 for the same period in 2022[143] Financial Covenants - The Company agreed to maintain a Cash Flow-to-Total Debt Service ratio of not less than 1.20 to 1.00, measured quarterly[174] - The Balance Sheet Leverage must be less than or equal to 2.50 to 1.00, tested quarterly[177] - The Company committed to combined annual capital expenditures not exceeding $1.5 million, tested annually[177] - The Loan-to-Value Ratio must not exceed 0.75 to 1.00, based on the fair market value of collateral[178] Off-Balance Sheet Arrangements - The Company has no off-balance sheet arrangements as of September 30, 2023[180]