TechPrecision Corporation Reports Second Quarter Fiscal Year 2010 Results

November 11, 2009 4:15 PM EST

WESTMINSTER, Mass.--(BUSINESS WIRE)-- TechPrecision Corporation (OTC Bulletin Board: TPCS) ("TechPrecision", or "the Company"), a leading manufacturer of large-scale, high-precision machined metal fabrications with customers in the alternative energy, medical, nuclear, defense, aerospace and other commercial industries, today reported financial results for the second quarter of fiscal year 2010, period ended September 30, 2009.

Second Quarter of Fiscal 2010 Highlights

    --  Net sales increased 11.1% to $15.1 million
    --  Gross profit declined 47.2% to $2.6 million
    --  Gross profit margin was 17.5% vs. 36.9% in the prior year
    --  Operating income was $2.0 million vs. $4.5 million in the prior year
    --  Income before income taxes was $1.9 million compared to $4.3 million
    --  Net income was $1.3 million vs. $2.5 million in the prior year
    --  Net income per common share was $0.09 basic and $0.06 diluted, versus
        $0.18 basic and $0.09 diluted for the second fiscal quarter of the
        previous year

Second Quarter Results

For the three months ended September 30, 2009, sales increased to $15.1 million or 11.1%, from $13.6 million in the second quarter of fiscal 2009. Net sales included $8.9 million of material sales to GT Solar that were triggered by that customer's April 2009 cancellation of open purchase orders. This non-recurring material transfer represents 59.3% of the net sales for the quarter.

Cost of sales for the quarter ended September 30, 2009 increased by $3.9 million to $12.5 million, an increase of 45.2%, from $8.6 million for the quarter ended September 30, 2008. The increase in the cost of sales was principally due to the impact of the non-recurring transfer of inventory to GT Solar as part of its April 2009 order cancellation. Gross margin was 17.5% in the second fiscal quarter of 2010 compared to a gross margin of 36.9% in the second fiscal quarter of 2009. The gross margin decline was attributable to costs associated with underutilized capacity, the mix of completed projects, and the lower margin inventory transfer.

Operating expenses for the quarter ended September 30, 2009 were $668,876 as compared to $544,955 for quarter ended September 30, 2008, reflecting an increase in compensation, legal costs and expenditures related to consulting fees and insurance.

Net income was $1.3 million or $0.09 per share basic and $0.06 per share diluted for the quarter ended September 30, 2009 as compared to $2.5 million or $0.18 per share basic and $0.09 per share diluted for the quarter ended September 30, 2008.

"Our fiscal second quarter results reflect TechPrecision's ability to operate profitably in the face of a continued lower level of production from our largest customer, GT Solar," said Mr. Louis Winoski, Interim CEO of TechPrecision Corporation. "We have optimized our cost structure to ensure we preserve a solid financial position while we focus on leveraging our core competency as a manufacturer of high-precision, large-scale metal fabrications and machined components to win new business in our target industries."

Financial Condition

At September 30, 2009, TechPrecision had working capital of $13.0 million as compared with working capital of $11.1 million at March 31, 2009, an increase of $1.9 million. Cash used in operations was $1.4 million for the six months ended September 30, 2009 as compared to cash provided by operations of $7.4 million for the six months ended September 30, 2008. The decrease in operating cash flow was due to the net effect of a decrease in net profits, decrease in costs incurred on uncompleted contracts and payment of accounts payable and accrued expenses during the six months ended September 30, 2009. As of September 30, 2009, the Company had $9.5 million in cash and equivalents. Stockholder's equity increased to $11.2 million compared to $10.1 million on March 31, 2009.

Business Outlook

Mr. Winoski added, "We are focused on positioning TechPrecision for long-term, sustainable growth. Albeit reduced from the high levels of last year, we continue to maintain orders from our large solar customer. We are also continuing to manufacture certain key components for initial units for our proton beam radiotherapy customer and this business has the potential to expand provided that testing of the system continues to progress successfully. We are also encouraged by our improved order flows from our customers in the nuclear power industry. Furthermore, earlier this month, we strengthened our sales and marketing team with the recently announced hiring of William N. Hogenauer to the newly created position of Director of Business Development. Bill is working with our entire team on winning additional business from existing customers and attracting new customers in our target markets of medical, alternative and nuclear energy, and aerospace and defense. Given the long sales cycle in our business, it could take several quarters to see the full results of the investments we are making today; however, we are optimistic that our business will continue to recover from the lows seen in the first half of fiscal 2010."

Teleconference Information

The Company will hold a conference call at 10:00 a.m. Eastern (U.S.) time on Thursday, November 12, 2009. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 800-688-0796. International callers should dial +1-617-614-4070. When prompted by the operator, mention Conference Passcode 80080072.

If you are unable to participate in the call at this time, a replay will be available for 14 days starting on Thursday, November 12, 2009, at 12:00 p.m. Eastern Time. To access the replay, dial 888-286-8010 or 617-801-6888, and enter the passcode 65385019.

About TechPrecision Corporation

TechPrecision Corporation, through its wholly-owned subsidiary Ranor, Inc., manufactures metal fabricated and machined precision components and equipment. These products are used in a variety of markets including: alternative energy, medical, nuclear, defense, industrial, and aerospace to name a few. TechPrecision's goal is to be an end-to-end 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.

TECHPRECISION CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

                  Three months ended              Six months ended

                  September 30,                   September 30,

                  2009            2008            2009            2008

Net sales         $ 15,117,114    $ 13,601,010    $ 18,436,025    $ 25,259,144

Cost of sales       12,471,343      8,588,210       15,225,452      16,866,013

Gross profit        2,645,771       5,012,800       3,210,573       8,393,131

Operating
expenses:

Salaries and        331,302         322,035         724,669         757,130
related expenses

Professional        110,411         72,782          186,623         120,469
fees

Selling, general
and                 226,573         150,138         524,994         289,134
administrative

Total operating     668,286         544,955         1,436,286       1,166,733
expenses

Income from         1,977,485       4,467,845       1,774,287       7,226,398
operations

Other income
(expenses)

Interest expense    (107,390   )    (115,090   )    (211,552   )    (233,871   )

Interest income     5,184           -               8,370           -

Finance costs       (4,257     )    (4,687     )    (8,513     )    (8,513     )

Total other         (106,463   )    (119,777   )    (211,695   )    (242,384   )
income (expense)

Income before       1,871,022       4,348,068       1,562,592       6,984,014
income taxes

Provision for       550,388         1,871,968       366,703         2,936,218
income taxes

Net income        $ 1,320,634     $ 2,476,100     $ 1,195,889     $ 4,047,796

Net income per
share of common   $ 0.09          $ 0.18          $ 0.09          $ 0.30
stock (basic)

Net income per
share (fully      $ 0.06          $ 0.09          $ 0.06          $ 0.15
diluted)

Weighted average
number of shares    13,916,462      13,823,245      13,912,012      13,379,358
outstanding
(basic)

Weighted average
number of shares    21,300,150      26,978,330      19,930,238      26,736,678
outstanding
(fully diluted)

TECHPRECISION CORPORATION

CONSOLIDATED BALANCE SHEETS

                                              September 30, 2009  March 31, 2009

                                              (unaudited)         (audited)

ASSETS

Current assets

Cash and cash equivalents                     $ 9,537,327         $ 10,462,737

Accounts receivable, less allowance for         3,031,150           1,418,830
doubtful accounts of $25,000

Costs incurred on uncompleted contracts, in     3,603,134           3,660,802
excess of progress billings

Inventories - raw materials                     303,899             351,356

Deferred tax asset                              194,192             --

Prepaid expenses                                164,247             1,583,234

Other receivables                               30,000              59,979

Total current assets                            16,863,949          17,536,938

Property, plant and equipment, net              3,460,430           2,763,434

Equipment under construction                    -                   887,279

Deferred loan cost, net                         96,153              104,666

Total assets                                  $ 20,420,532        $ 21,292,317

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable                              $ 348,486             950,681

Accrued expenses                                541,306             710,332

Accrued taxes                                   498,448             155,553

Deferred revenues                               1,777,472           3,945,364

Current maturity of long-term debt              752,646             624,818

Total current liabilities                       3,918,358           6,386,748

LONG-TERM DEBT

Notes payable- noncurrent                       5,303,275           4,824,453

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 9,890,980 shares
issued and outstanding at September 30, 2009    2,287,508           2,287,508
and 6,295,508 at March 31, 2009 (liquidation
preference of $2,818,930 and $1,794,220 at
September 30, 2009 and March 31, 2009,
respectively.)

Common stock -par value $.0001 per share,
authorized, 90,000,000 shares, issued and       1,394               1,392
outstanding, 13,930,846 shares at September
30, 2009 and 13,907,513 at March 31, 2009

Paid in capital                                 2,794,671           2,872,779

Retained earnings                               6,115,326           4,919,437

Total stockholders' equity                      11,198,899          10,081,116

Total liabilities and stockholders' equity    $ 20,420,532        $ 21,292,317

TECHPRECISION CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited)

                                                 Six Months Ended

                                                 September 30,

                                                 2009            2008

CASH FLOWS FROM OPERATING ACTIVITIES

Net income                                       $ 1,195,889     $ 4,047,796

Adjustments to reconcile net income to net cash
provided by operating activities:

Depreciation and amortization                      208,016         275,378

Share based compensation                           7,500           --

Changes in operating assets and liabilities:

Accounts receivable                                (1,612,320 )    1,216,678

Deferred income taxes                              (194,192   )    (133,999   )

Inventory                                          47,457          (111,909   )

Costs incurred on uncompleted contracts            7,254,185       313,021

Other receivables                                  29,979          --

Prepaid expenses                                   1,418,987       (1,575,887 )

Accounts payable                                   (602,195   )    2,388,747

Accrued expenses                                   173,869         1,323,035

Customer advances                                  (9,364,407 )    (416,638   )

Net cash (used in) provided by operating           (1,437,232 )    7,383,852
activities

CASH FLOW FROM INVESTING ACTIVITIES

Purchases of property, plant and equipment         (9,220     )    (137,609   )

Deposits on equipment                              -               (150,000   )

Net cash used in investing activities              (9,220     )    (287,609   )

CASH FLOWS FROM FINANCING ACTIVITIES

Capital distribution of WMR equity                 (92,256    )    (93,548    )

Proceeds from exercised stock options and          6,650           170,060
warrants

Borrowings under line of credit facility           919,297         -

Payment of notes and lease obligations             (312,649   )    (306,072   )

Net cash provided by (used in) financing           521,042         (229,560   )
activities

Net (decrease) increase in cash and cash           (925,410   )    6,866,683
equivalents

Cash and cash equivalents, beginning of period     10,462,737      2,852,676

Cash and cash equivalents, end of period         $ 9,537,327     $ 9,719,359

    Source: TechPrecision Corporation

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