TechPrecision .(US:TPCS)2019-02-14 01:15Financial Data and Key Metrics Changes - Net income for Q3 2019 was $218,000 compared to a net loss of $691,000 in the same quarter last year, indicating a significant improvement in profitability [6][11] - Gross profit increased to $1 million in Q3 2019 from $0.4 million in Q3 2018, with gross margin improving to 22.7% from 11.1% year-over-year [10][11] - For the nine months ended December 31, 2018, net sales decreased by $2.1 million or 50% to $12 million compared to $14.1 million for the same period in 2017 [11] Business Line Data and Key Metrics Changes - Net sales in defense markets increased by $0.7 million, while energy market sales decreased by $0.1 million compared to the same quarter last year [9] - The backlog increased from $12.1 million at September 30, 2018, to $14.1 million at December 31, 2018, driven by $6.3 million in new orders [15] Market Data and Key Metrics Changes - The company continues to focus on the U.S. defense industry, particularly in naval submarine manufacturing, with significant demand drivers identified for future growth [18][19] - The Virginia payload module and the Columbia program are expected to double the existing workload for nuclear submarine construction starting in 2019 [19][20] Company Strategy and Development Direction - The company aims to enhance shareholder value by focusing on tactical execution to meet customer expectations, particularly in the defense sector [15][18] - Management is committed to exploring strategic alternatives while actively reviewing business opportunities within the defense industry [44][80] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a strong pipeline of business from primary defense customers, despite delays in government appropriations affecting contract timing [20][43] - The demand for the company's services is significant and is not expected to decrease, with management anticipating increased capacity utilization moving into 2020 [43] Other Important Information - The company adopted a new revenue recognition model that allows revenue to be recognized over the project duration, which may affect comparisons of backlog figures [7][56] - Total long-term debt was reported at $3.6 million, with expectations for continued decreases in interest expense as debt principal is amortized [11][93] Q&A Session Summary Question: What percentage of the $14.1 million backlog is from the U.S. Navy? - Management indicated that approximately 80% of the backlog is from the U.S. Navy [24] Question: Can you clarify how backlog is calculated? - Backlog consists only of funded purchase orders, and any unfunded contracts are not included [25][27] Question: What opportunities exist in the nuclear sector? - The company is competing for bids in the U.S. nuclear industry, primarily for replacement parts and new components [37] Question: What is the expected timeframe for the $75 million to $100 million opportunities? - Management stated that this timeframe is over a two-year period [82] Question: Is the company actively reviewing strategic alternatives? - Yes, management continues to actively review strategic alternatives to maximize shareholder value [44][80]