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OFFON

TECHPRECISION CORPORATION

(TPCS)
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TechPrecision : Reports Full-Year and Fourth Quarter 2014 Financial Results

07/15/2014 | 04:02pm EDT

CENTER VALLEY, Pa., July 15, 2014 /PRNewswire/ -- TechPrecision Corporation (OTC Bulletin Board: TPCS) ("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 naval/maritime, energy and precision industrial sectors, today reported financial results for the fourth quarter and full-year periods of fiscal year 2014, the periods ended March 31, 2014.

Year-end Recap

"We continue to navigate a challenging period for TechPrecision, but are taking steps to prepare the company for better days ahead," commented Len Anthony, TechPrecision's Executive Chairman. "A leadership change at Ranor infuses a proven executive with a strong track record of scaling large organization best practices inside smaller entrepreneurial entities as evident from his recent experience working with private equity backed organizations. We look forward to Alexander Shen working with the Ranor team to enable efficient utilization of Ranor's assets, increased production throughput and the creation of durable customer relationships. In addition, we took steps to resolve the company's financing situation, with an interim package which eliminates the coverage ratio covenants without materially changing our cash flow. This sets the stage for a long-term financing for the company."

Mr. Anthony continued, "Our fiscal 2014 results were impacted by $11.4 million in lower sales volume as well as $4.6 million in contract losses associated with two customer orders. We are presently working to recover some of the contract losses on one of the contracts as the losses are associated with a customer requested modification to reduce or delay the number units delivered under a purchase order. The lower sales volume in fiscal 2014, can be attributed to $5.6 million in lower sales volume from our proton beam customer, Mevion Systems, $3 million in reduced sales volume with our polysilicon customer, and $3.1 million in lower sales from our China subsidiary when compared to the sales level reported in fiscal 2013. The majority of contract losses were driven by circumstances that were unique to just two customer orders and the balance of our orders from other customers yielded margins more in-line with our expectations. Now that Mevion's S250 proton therapy system is actively treating patients at the Siteman Cancer Center and Mevion's customer base has a clear clinical milestone to support aggressive completion of the other S250 sites under development, we expect to see Mevion's sales volume replicate and eventually surpass the sales volume achieved in fiscal 2013. As we continue through 2015, our backlog with Mevion Systems should begin to build while our core business within the naval/maritime and energy/nuclear sectors remains steady."

Fourth Fiscal Quarter 2014 Summary: Three Months Ended March 31

    --  Net sales decreased 64% to $3.6 million compared to $9.9 million in the
        year-ago quarter.
    --  Cost of goods sold included $3.1 million of contract losses recorded in
        the quarter ended March 31, 2014
    --  The Company is engaged in an ongoing process to recover most of the
        contract loss recorded within the fourth quarter.
    --  Due to the contract losses and lower revenue, gross margin was negative
        $2.7 million, or negative 73%, compared to gross profit of $1.6 million
        or 16.4% gross profit margin, in the year-ago quarter.
    --  The net loss was $4.1 million for the fourth quarter compared to a net
        loss of $1.1 million in the prior year fourth quarter.

Fiscal Year 2014 Summary: 12 Months Ended March 31

    --  For the year ended March 31, 2014, net revenue decreased 35% to $21.1
        million compared to $32.5 million in the same period last year.
    --  Cost of goods sold included $4.9 million of contract losses recorded
        during the year ended March 31, 2014
    --  Gross margin was negative 3.5% for the year compared to 20.2% gross
        profit margin in the prior fiscal year.
    --  Selling, general and administrative expense decreased 25% to $6.1
        million from $8.2 million in the prior year.
    --  Loss from operations was $6.8 million for the year compared to an
        operating loss of $1.6 million in the prior year.
    --  Net loss was $7.1 million for the year compared to a net loss of $2.4
        million in the prior year.

Balance Sheet Summary

At March 31, 2014, TechPrecision had negative working capital of $2.0 million as compared with working capital of $3.1 million at March 31, 2013. As of March 31, 2014, the Company had $1.1 million in cash and cash equivalents compared to $3.1 million at March 31, 2013.

Teleconference Information

The Company will hold a conference call at 4:30p.m. Eastern (U.S.) time on Tuesday, July 15, 2014. To participate in the live conference call, please dial 1-888-397-5352 five to 10 minutes prior to the scheduled conference call time. International callers should dial 1-719-457-2085. When prompted by the operator, mention Conference Passcode 6570327.

A replay will be available for one week starting on Tuesday, July 15, 2014, at 7:30 p.m. Eastern Time. To access the replay, dial 1-877-870-5176 or 1-858-384-5517. When prompted, enter Conference Passcode 6570327.

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=109994.

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.


    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

-- Tables Follow --


                                                           TECHPRECISION CORPORATION

                                                     CONSOLIDATED STATEMENTS OF OPERATIONS



                                       Three Months ended March 31,                        Years ended March 31,

                                            2014                                   2013                    2014               2013
                                            ----                                   ----                    ----               ----

    Net sales                        $3,608,202                             $9,954,751             $21,068,063        $32,472,919

    Cost of sales                   6,260,181                              8,324,088              21,799,856         25,914,345
                                    ---------                              ---------              ----------         ----------

    Gross (loss) profit           (2,651,979)                             1,630,663               (731,793)         6,558,574


    Selling, general and
     administrative                 1,424,189                              1,942,575               6,112,909          8,160,984
                                    ---------                              ---------               ---------          ---------

    Loss from operations          (4,076,168)                             (311,912)            (6,844,702)       (1,602,410)


     Other income (expense)            17,458                               ( 3,001)                     874           (29,586)

     Interest expense               (222,059)                              (90,396)              (440,634)         (309,799)

     Interest income                      161                                (2,146)                  3,598              2,189
                                          ---                                 ------

    Total other expense             (204,440)                              (95,543)              (436,162)         (337,196)
                                     --------                                -------                --------           --------


    Loss before income taxes      (4,280,608)                             (407,455)            (7,280,864)       (1,939,606)

    Income tax (benefit) expense    (185,473)                               707,706               (185,473)           472,331
                                     --------                                -------                --------            -------

    Net loss                       $(4,095,135)                          $(1,115,161)           $(7,095,391)      $(2,411,937)
                                    ===========                            ===========             ===========        ===========

    Net loss per share
     (basic)                            $(0.19)                               $(0.06)                $(0.34)           $(0.13)
                                         ======                                 ======                  ======             ======

    Net loss per share
     (diluted)                          $(0.19)                               $(0.06)                $(0.34)           $(0.13)
                                         ======                                 ======                  ======             ======

    Weighted average number of
     shares outstanding (basic)    21,222,166                             19,148,224              20,776,914         19,004,897

    Weighted average number of
     shares outstanding (diluted)  21,222,166                             19,148,224              20,776,914         19,004,897


                                            TECHPRECISION CORPORATION

                                           CONSOLIDATED BALANCE SHEETS


                                                         March 31, 2014             March 31, 2013
                                                         --------------             --------------

    ASSETS

    Current assets:

    Cash and cash equivalents                                            $1,086,701                 $3,075,376

    Accounts receivable, less allowance
     for doubtful accounts of $25,010 in
     2014 and 2013                                                        2,280,469                  4,330,637

    Costs incurred on uncompleted
     contracts, in excess of progress
     billings                                                             5,258,002                  4,298,293

    Inventories- raw materials                                              293,326                    354,516

    Income taxes receivable                                                   8,062                    374,030

    Current deferred taxes                                                  991,096                    255,765

    Other current assets                                                    461,245                  1,578,484
                                                                            -------                  ---------

       Total current assets                                              10,378,901                 14,267,101

    Property, plant and equipment, net                                    6,489,212                  7,300,248

    Other noncurrent assets, net                                            105,395                         --
                                                                            -------                        ---

       Total assets                                                     $16,973,508                $21,567,349
                                                                        ===========                ===========


    LIABILITIES AND STOCKHOLDERS' EQUITY:

    Current liabilities:

    Accounts payable                                                     $2,888,385                 $2,537,060

    Accrued expenses                                                      3,893,028                  1,874,924

    Accrued taxes payable                                                        --                   232,624

    Deferred revenues                                                     1,461,689                    253,813

    Revolving credit facility                                                    --                   500,000

    Debt                                                                  4,169,771                  5,784,479
                                                                          ---------                  ---------

       Total current liabilities                                         12,412,873                 11,182,900

    Long-term debt, including capital
     leases                                                                  38,071                     31,108

    Noncurrent deferred taxes                                               991,096                    255,765

    Commitments and contingent liabilities

    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
     2,477,508 and 5,532,998 shares issued
     and outstanding at March 31, 2014 and
     2013, (liquidation preference of
     $706,090 and $1,576,904 at March 31,
     2014 and 2013)



                                                                            644,110                  1,310,206

    Common stock -par value $.0001 per
     share, authorized, 90,000,000 shares
     issued and outstanding, 23,951,004
     shares at March 31, 2014 and
     19,956,871 at March 31, 2013

                                                                              2,395                      1,996

    Additional paid in capital                                            6,105,211                  5,076,552

    Accumulated other comprehensive loss                                   (55,097)                 (221,418)

    (Accumulated deficit) retained
     earnings                                                           (3,165,151)                 3,930,240
                                                                         ----------                  ---------

       Total stockholders' equity                                         3,531,468                 10,097,576
                                                                          ---------                 ----------

       Total liabilities and stockholders'
        equity                                                          $16,973,508                $21,567,349
                                                                        ===========                ===========


                        TECHPRECISION CORPORATION

                  CONSOLIDATED STATEMENTS OF CASH FLOWS


                                             Years Ended March 31,
                                             ---------------------

                                      2014                         2013
                                      ----                         ----

    CASH FLOWS
     FROM
     OPERATING
     ACTIVITIES

    Net loss                                  $(7,095,391)              $(2,411,937)

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

    Depreciation
     and
     amortization                                  953,428                    846,012

    Loss on sale
     of
     equipment                                         882                         --

    Stock based
     compensation
     expense                                       362,962                    337,023

    Deferred
     income
     taxes                                              --                   695,762

    Provision
     for
     contract
     losses                                      2,988,931                    270,172

    Changes in
     operating
     assets and
     liabilities:

    Accounts
     receivable                                  2,056,509                    572,786

    Costs
     incurred on
     uncompleted
     contracts,
     in excess
     of progress
     billings                                    (959,709)                 (388,267)

    Inventories
     - raw
     materials                                      62,220                     19,985

    Other
     current
     assets                                      1,059,350                   (75,540)

    Taxes
     receivable                                    365,968                  1,824,262

    Other
     noncurrent
     assets                                      (105,395)                   212,700

    Accounts
     payable                                       357,115                  1,171,600

    Accrued
     expenses                                    (818,858)                 (822,450)

    Accrued
     taxes
     payable                                     (232,624)                    72,638

    Deferred
     revenues                                    1,207,223                  (545,600)
                                                 ---------                   --------

    Net cash
     provided by
     operating
     activities                                    202,611                  1,779,146


    CASH FLOWS
     FROM
     INVESTING
     ACTIVITIES

    Purchases of
     property,
     plant and
     equipment                                    (64,895)                 (663,185)
                                                   -------                   --------

    Net cash
     used in
     investing
     activities                                   (64,895)                 (663,185)


    CASH FLOWS
     FROM
     FINANCING
     ACTIVITIES

    Borrowings
     of short-
     term debt                                          --                   500,000

    Repayment of
     long-term
     debt                                      (2,126,935)               (1,366,017)
                                                ----------                 ----------

    Net cash
     used in
     financing
     activities                                (2,126,935)                 (866,017)

    Effect of
     exchange
     rate on
     cash and
     cash
     equivalents                                       544                      1,947
                                                       ---                      -----

    Net
     (decrease)
     increase in
     cash and
     cash
     equivalents                               (1,988,675)                   251,891

    Cash and
     cash
     equivalents,
     beginning
     of period                                   3,075,376                  2,823,485
                                                 ---------                  ---------

    Cash and
     cash
     equivalents,
     end of
     period                                     $1,086,701                 $3,075,376
                                                ==========                 ==========

SOURCE TechPrecision Corporation


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