TechPrecision .(US:TPCS)2019-11-14 01:37Financial Data and Key Metrics Changes - Net sales for Q2 fiscal 2020 were $3.1 million, a decrease from $3.6 million in Q2 fiscal 2019, reflecting a 14% decline [6][8] - The net loss for Q2 fiscal 2020 was $291,000 compared to a net income of $345,100 for the same period a year ago [7][10] - For the six months ended September 30, 2019, net sales decreased by $312,000 or 4% to $7.4 million compared to $7.7 million for the same period in 2018 [8][10] - Gross margin for the six months ended September 30, 2019 was 20.6% [9] Business Line Data and Key Metrics Changes - The backlog at September 30, 2019 totaled $16.4 million, an increase of $3.8 million compared to $12.6 million at March 31, 2019 [5] - Cost of sales for Q2 fiscal 2020 was $2.7 million, up from $2.5 million in the same quarter the previous year [6] Market Data and Key Metrics Changes - The company continues to see meaningful opportunities in the defense sector, particularly in the nuclear submarine business for the next 12 months and beyond [12] Company Strategy and Development Direction - The company aims to operate above current revenue and operating income levels and return to profitability during the second half of fiscal 2020 [5] - Management is focused on the defense industry, specifically naval submarine manufacturing, and is excited about the start-up of multiple new projects [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the backlog increase and the potential for future profitability, indicating that the losses incurred were primarily due to start-up costs for new projects [35][36] - The company is cautious about revealing specific future revenue expectations due to competitive reasons [111][119] Other Important Information - Cash provided by operating activities was $0.9 million for the six months ended September 30, 2019 [11] - The company has a net debt of $1.3 million at the end of Q2 fiscal 2020 [11] Q&A Session Summary Question: What is the current backlog? - Management indicated that they cannot provide the current backlog number as it is netted against revenue recognized [15] Question: Is Block 5 effective and funded? - Management confirmed that Block 5 is a viable program but could not provide specific funding details [21][22] Question: Can you discuss the cost issues on a project loss? - Management explained that the losses were due to start-up costs for new projects and do not expect these losses to repeat [34][36] Question: What is the expected capital spending program over the next one to two years? - Management declined to answer due to competitive reasons [73] Question: Are there any non-defense business opportunities? - Management stated that non-defense business is pursued opportunistically, but the focus remains on defense [77] Question: Will the company announce large orders received mid-quarter? - Management indicated that they would need client permission and must balance competitive concerns before making announcements [116] Question: How does revenue become realized through the process? - Management explained that revenue is recognized when items ship or through percent complete revenue on certain projects [132]