TechPrecision Corporation Reports Fiscal First Quarter 2012 Results

CENTER VALLEY, Pa., Aug. 15, 2011 – 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 systems with customers in the alternative energy, cleantech, medical, nuclear, defense, aerospace and other commercial industries, today reported financial results for the first quarter of fiscal year 2012, the period ended June 30, 2011.

First Quarter 2012 Highlights

• Net sales were up 49% to $9.2 million compared to $6.2 million in the year-ago quarter and were up 14% sequentially compared to $8.1 million in the fourth fiscal quarter of 2011.
• TechPrecision's backlog at the end of the fiscal first quarter of 2012 was $26.3 million, including $4.3 million in backlog contributed from its China subsidiary, compared with a $25.2 million backlog at June 30, 2010; during July 2011, the Company received an additional $5.2 million in orders from existing customers.
• Gross profit was $2.4 million, or 26.4% gross profit margin compared to gross profit of $2.3 million or 37.6% gross profit margin in the year-ago quarter and compared sequentially to gross profit of $2.2 million or 26.7% gross profit margin for the quarter ended March 31, 2011.
• Operating expenses increased by 70% to $1.7 million compared with $1.0 million in the prior year quarter, reflecting increased staffing levels in the U.S. and China, and operating costs associated with the Company's China expansion, including increased travel costs.  
• The Company incurred higher operating costs during the first quarter of 2012 to establish and support operations at its WCMC subsidiary in China.  However, WCMC did not contribute additional revenue during the quarter ended June 30, 2011.  
• Operating income was $0.7 million for the first quarter compared to operating income of $1.3 million in the prior year quarter.
• Net income in the first quarter was $0.4 million or $0.02 per basic and $0.01 per fully diluted share compared to net income of $0.8 million or $0.06 per share basic and $0.04 per share fully diluted share in the prior year quarter.

First Quarter 2012 Results

For the three months ended June 30, 2011, sales increased 49% or $3.0 million to $9.2 million from $6.2 million in the year-ago period and increased 14% sequentially from $8.1 million in the fourth quarter of fiscal 2011.  Net sales to TechPrecision's largest customer, GT Solar, increased by $0.7 million, when compared to the same period last year, while net sales to customers in Nuclear markets increased by $0.9 million, in Defense and Aerospace markets by $0.6 million, and in other Commercial markets by $0.8 million when compared with the three months ended June 30, 2010.

The Company completed the quarter ended June 30, 2011 with a backlog of $26.3 million, down from $32.5 million at the end of March 31, 2011.  Subsequent to June 30, 2011, the Company announced the receipt of new orders totaling $5.2 million from existing customers.

"We sustained the sales momentum from our prior fiscal year, which reflects the continued success of our strategic business development and selling initiatives," commented James S. Molinaro, CEO of TechPrecision. "We experienced a diverse mix of orders during the quarter, reflecting strength across each of our areas of focus and a reduced reliance on our largest cleantech customer. The qualification of our manufacturing facility in Massachusetts to perform a broader spectrum of work for key defense customers has allowed us to pursue opportunities previously not available to us. In addition, when we bring our new gantry mill on-line later this year, we will be able to provide solutions for the defense sector on an even larger scale. Subsequent to the end of the quarter, we have already announced new orders totaling $5.2 million received from existing customers across a range of our targeted verticals. Earlier today we announced a purchase order for WCMC to produce high-temperature vacuum chambers for Sapphire manufacturing equipment. Initial units of the order will ship from our WCMC subsidiary in China in September and October of 2011 and high volume production is forecasted to begin during calendar 2012. Sapphire is a key growth area for us and we are very pleased to extend our core competencies into producing high-temperature vacuum chambers for the Sapphire market."  

Gross margin was 26.4%, or $2.4 million gross profit, in the first fiscal quarter of 2012 compared to a gross margin of 37.6%, or $2.3 million gross profit, in same period last year.  Sequentially, gross profit and gross margin for the first quarter of 2012 compares with a gross profit of $2.2 million and 26.7% gross margin for the quarter ended March 31, 2011.   Gross margin in any reporting period is impacted by the mix of services we provide on projects completed within that period.  Generally, our margins for materials procurement services are lower than the margins we realize on our materials processing services.  The mix of services on projects completed in the first quarter ended June 30, 2010 included a historically low level of materials procurement services and, therefore, the reported gross margin was well above the reported gross margin of 30.7% for the full fiscal year ended March 31, 2011.  The mix of processing and materials procurement services on projects closed during the first quarter ended June 30, 2011 included over $2 million more in material procurement services than the same period a year ago.  This shift in mix served to decrease gross margin when compared to the reported gross margin for the comparable period one year ago.    

Total operating expenses for the quarter ended June 30, 2011 were $1.7 million as compared to $1.0 million for the quarter ended June 30, 2010.  The $0.7 million or 70% increase was driven by increased staffing levels in the U.S. and China, higher spending on travel and investor relations as well as the incremental cost of scaling operating capacity at our WCMC subsidiary in China.  

Net income was $0.4 million or $0.02 per basic and $0.01 per diluted share for the quarter ended June 30, 2011 as compared to net income of $0.8 million or $0.06 per basic share and $0.04 per diluted share for the quarter ended June 30, 2010.

"We are currently ramping production capacity to achieve targeted volumes for our solar and sapphire customers from our WCMC subsidiary in China," added Mr. Molinaro. "Late in our prior fiscal year and during our fiscal first quarter of 2012, we invested significantly to prepare our WCMC subsidiary for expected growth. As a result, from an operating expense perspective, we incurred operating costs for WCMC in the fiscal first quarter of 2012 with little revenue contribution.  We expect this investment to yield meaningful near-term returns as we ramp to targeted production volumes at WCMC and expect this subsidiary will provide the foundation from which we will support our customers' growth needs in Asia. This has been a transition quarter as we shift from our historic single site configuration to a two-site international platform.  With that shift, we are incurring most of the expenses associated with added capacity and capability one quarter ahead of the revenue benefits WCMC will generate. We expect to achieve significant top and bottom line benefit from this ramp up beginning in the fiscal second quarter of 2012."

Balance Sheet

At June 30, 2011, TechPrecision had working capital of $12.5 million as compared with working capital of $13.6 million at March 31, 2011, a decrease of $1.1 million.  Cash generated from operations was $1.4 million for the three months ended June 30, 2011 as compared to cash provided by operations of $1.0 million for the three months ended June 30, 2010. As of June 30, 2011, the Company had $7.3 million in cash and cash equivalents, down $0.2 million compared to the balance at March 31, 2011.  Stockholders' equity increased 2.7% to $14.2 million compared to $13.9 million at March 31, 2011.

Teleconference Information

The Company will hold a conference call at 4:30 p.m. Eastern (U.S.) time on Monday, August 15, 2011. To participate in the live conference call, please dial the following number five to 10 minutes prior to the scheduled conference call time: 1-877-941-2068.  International callers should dial +1-480-629-9712.  When prompted by the operator, mention Conference Passcode 4459313.

If you are unable to participate in the call at this time, a replay will be available for one week starting on Monday, August 15, 2011 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 4459313.

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://viavid.net/dce.aspx?sid=000089F9.

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), cleantech, 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.

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SOURCE TechPrecision Corporation