TechPrecision Corporation Reports Third Quarter Fiscal Year 2010 Results

WESTMINSTER, Mass., Feb. 11 /PRNewswire-FirstCall/ -- 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 third quarter of fiscal year 2010, the period ended December 31, 2009.

Third Quarter of Fiscal 2010 Highlights

• Revenue for the third quarter totaled $5.2 million, compared to normalized revenue of $6.2 million in the second quarter (excluding the non-recurring inventory sale of $8.9 million to GT Solar in August 2009) and $3.3 million during the Company's first quarter of fiscal 2010
• Gross profit during the third quarter was $1.0 million, or 19%
• Net income for the third quarter was $204,697 or $0.01/share, including a $276,415 tax benefit for the quarter
• TechPrecision's backlog at the end of the quarter was $15.7 million, increasing to $18.1 million as of the end of January, 2010
• Completed the quarter with $13 million in net, working capital and $9.4 million in cash and cash equivalents
• Subsequent to the end of the quarter, TechPrecision received orders from GT Solar totaling $3.8 million to be delivered during the fourth quarter of fiscal 2010 and the first quarter of fiscal 2011.

Third Quarter Results

For the three months ended December 31, 2009, sales decreased to $5.2 million or 39%, from $8.2 million in the third quarter of fiscal 2009.   Net sales were negatively impacted by the global recession and downturn in the solar industry which affected orders from TechPrecision's largest customer, GT Solar. Subsequent to the end of the quarter, GT Solar requested that TechPrecision expand production.  

Gross margin was 19%, or $1.0 million, in the third fiscal quarter of 2010 compared to a gross margin of 31%, or $2.6 million, in the third quarter of fiscal 2009.  The gross margin decline was attributable to costs associated with underutilized capacity and a project mix with fewer turn key services on completed projects during the quarter.  Total operating expenses for the quarter ended December 31, 2009 were $990,000 as compared to $539,000 for the quarter ended December 31, 2008, reflecting an increase in employee compensation, professional fees, public company expenses, additional consulting fees and a $235,000 charge for bad debt expense.  Operating income was $24,000 compared to $2.1 million in the prior year.

Net income was $205,000 or $0.01 per share basic and $0.01 per share diluted for the quarter ended December 31, 2009 as compared to $2.5 million or $0.18 per share basic and $0.09 per share diluted for the quarter ended December 31, 2008.

The Company completed the quarter with a backlog of $15.7 million, up from $14.4 million at the end of September 2009.

"As expected, the third quarter was impacted by the slowdown in production from our largest customer, GT Solar, but we made tangible progress in our effort to position TechPrecision for long-term, sustainable growth," said Mr. Louis Winoski, Interim CEO of TechPrecision Corporation. "During the quarter and in the six weeks since, we have seen steady improvements throughout the industries we serve and increased activity, including requests for proposals and expanded sales activity.  Specifically, we have seen increased activity from our tier one customers in the nuclear industry and we received a $3.8 million dollar order from GT Solar in our alternative energy market.  We are greatly encouraged by our increasing backlog which stood at $15.7 million at the end of our third fiscal quarter on December 31, 2009. This was the first seven figure net increase in three or four quarters and it validates our confidence in improving market conditions. By the end of January 2010, our backlog had increased to $18.1 million and by the end of our fiscal year, in March, we expect the backlog to exceed $20 million."  

YTD Financial Results

For the nine months ended December 31, 2009, sales decreased to $23.7 million or 30%, from $33.8 million in the first nine months of fiscal 2009. A significant portion of the decrease resulted from lower sales volume with our largest customer, GT Solar. Also, the global economic downturn adversely impacted our business during much of the first nine months of fiscal year 2010.

Gross margin was 18%, or $4.2 million, for the first nine months of fiscal 2010 compared to a gross margin of 33%, or $11 million, in the comparable period of fiscal 2009. The gross margin decline was attributable to costs associated with underutilized capacity, the mix of total services on completed projects, and the lower margin inventory transfer, completed during August 2009. Total operating expenses for the nine months ended December 31, 2009 were $2.4 million as compared to $1.7 million for the same period ended December 31, 2008, reflecting an increase in employee compensation, professional fees, public company expenses and additional consulting fees, severance pay, bad debt expense and corporate travel.

Net income was $1.4 million or $0.10 per share basic and $0.07 per share diluted for the nine months ended December 31, 2009 as compared to $5.1 million or $0.37 per share basic and $0.19 per share diluted for the nine months ended December 31, 2008.

Balance Sheet

At December 31, 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 nine months ended December 31, 2009 as compared to cash provided by operations of $4.3 million for the nine months ended December 31, 2008. The decrease in operating cash flow was due to the net effect of a decrease in net profits, decrease in customer advances and payment of accounts payable and accrued expenses during the nine months ended December 31, 2009.  As of December 31, 2009, the Company had $9.4 million in cash and equivalents.  Stockholders' equity increased to $11.4 million compared to $10.1 million on March 31, 2009 representing an increase of $1.3 million.

Business Outlook

Mr. Winoski added, "We have spent the last three quarters repositioning the Company to a point where it can proactively pursue longer term production programs within the main industries we serve – nuclear, defense, aerospace, medical device and alternative energy. We have brought in new senior management and added board members, both with relevant industry experience. We have added focused, ongoing and senior level business development activities and right-sized the operation to function as a leaner manufacturing entity – all while maintaining profitability during a difficult economy.  We expect that the hard work we have done during that last nine months will begin to manifest into positive financial results in the current fiscal quarter and our next fiscal year.  We believe we are turning the corner and building momentum."