TechPrecision Corporation Reports Second Quarter Fiscal Year 2012 Results

CENTER VALLEY, Pa., Nov. 14, 2011 /PRNewswire/ -- TechPrecision Corporation (OTC Bulletin Board: TPCS) ("TechPrecision", or "the Company"), an industry leading 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 second quarter of fiscal year 2012, the period ended September 30, 2011.

Second Quarter of Fiscal 2012 Financial Overview

Second Quarter Operational Highlights

• During the second quarter of fiscal 2012, TechPrecision manufactured product for a customer with a sales value of $3.4 million.  This product, was qualified and accepted by the customer, however the customer delayed delivery until October. The entire $3.4 million of finished and accepted products will be recognized as revenue in the third quarter and contribute incrementally to third quarter results.  Approximately one-third of this production was produced at Wuxi Critical Mechanical Components Co. Ltd, or WCMC, our subsidiary in China.
• An entire solar product line was successfully transitioned from Ranor to WCMC, and WCMC is now scaling volume production.
• TechPrecision's WCMC facility is expected to contribute more than 20% of the Company's consolidated third quarter revenue, and WCMC has added a second customer for multi-crystalline solar chambers, two new customers for mono-crystalline solar chambers and two new sapphire LED chamber customers, all of which should benefit fiscal 2012.
• WCMC is strategically positioned to benefit from the solar industry's shift from PV multi-crystalline to mono-crystalline and sapphire, with customers in place. In addition, management expects to participate in multiple product lines for its largest customer, compared to the single product line produced historically.
• Ranor remains well-positioned to serve the nuclear, defense and sapphire industry in the United States.
• The Company has positioned itself to have a competitive cost structure to profitably serve its target markets once both subsidiaries are fully ramped.
• TechPrecision's backlog at the end of the second quarter of 2012 totaled $29.9 million compared with a backlog of $25.2 million at June 30, 2011 and $26.4 million at September 30, 2010.

"We made tremendous progress in our effort to enhance operations and diversify revenue, our stated strategic objective, during the quarter," said Mr. James Molinaro, CEO of TechPrecision Corporation. "Though our financial results were impacted in the short-term by the customer requested delivery delay, I am very pleased with our progress to support our key customers in the United States and China. Our WCMC subsidiary is now manufacturing product that not only has now been qualified and accepted by two customers in China, but also can now produce at volumes for these and other customers in Asia.  As a result of our successful transfer of an entire solar product line from Ranor, in the U.S. to WCMC, we expect our WCMC subsidiary to contribute more than 20% of our third quarter revenue as this ramp continues. We have added a second customer for multi-crystalline solar chambers, two new customers for mono-crystalline solar chambers and two new sapphire LED chamber customers, all of which should benefit fiscal 2012, particularly in the second half of the fiscal year. This demonstrated progress in diversifying our solar and LED manufacturing business provides me with confidence that we can continue grow our business even as the overall solar industry experiences a cyclical decline."

Mr. Molinaro continued, "While we have successfully ramped the WCMC operation and set the stage for continued growth in China during the next year, we continue to focus on expanding our customer base and operations at Ranor. In the short-term, this involves prototyping work for our commercial industrial gas customer and first article production for defense customers. Ranor also remains strategically positioned to serve the nuclear, defense and some of the sapphire industry domestically. Meanwhile, the solar industry is transitioning from PV multi-crystalline to mono-crystalline and many companies are adding sapphire production lines. As a result, the industry is forecasting ongoing growth in China, and our WCMC subsidiary is uniquely positioned to serve these market trends in China, close to end users. The new business we have secured to provide components for mono-crystalline and sapphire production confirms this belief."

Business Outlook

"We expect revenues for Q3 fiscal 2012 to be in the range of $12.5-$14.5 million, inclusive of the $3.4 million of solar production described above," commented Mr. Molinaro. "A shift of a large single-order in the subsequent quarter could negatively impact the actual results. As the Company continues to increase its revenues, a single-order event will be less impactful to a quarter and our financial results."

"While the solar and LED industry appear weak in the United States and Europe, new initiatives in China continue to support growth in both segments," added Mr. Molinaro. "China has now adopted legislation to ban incandescent light bulbs at 15W and greater; strengthening the demand for LED light sources. In addition, China is reviewing adoption of new legislation for an additional domestic solar installation program of 15 Giga-watts. We believe both actions by the government will support continued growth in the solar and LED sectors, and our WCMC subsidiary is ideally situated, both geographically and strategically, to meet this continued strong demand."

Second Quarter Results

For the three months ended September 30, 2011, sales decreased 15% or $1.3 million to $7.1 from $8.4 million in the year-ago period and decreased 23% sequentially from $9.2 million in the first quarter of fiscal 2012. The primary reason for the sequential and comparable prior year period decrease in revenue was the $3.4 million of qualified production for the Company's largest customer completed during the second quarter but not recognized as revenue until October 2011.  

Cost of sales for the quarter ended September 30, 2011 decreased by $0.6 million to $5.2 million, a decrease of 10%, from $5.8 million for the quarter ended September 30, 2010. Gross margin was 27% in the second fiscal quarter of 2012 compared to a gross margin of 31% during the second quarter of fiscal 2011 and 26% in the first fiscal quarter of 2012. Operating expenses for the second quarter of fiscal 2012 increased to $2.0 million from $1.1 million in the year ago second quarter ended September 30, 2010 and from $1.7 million for the first quarter of fiscal 2012. Net loss was ($0.1) million, or ($0.01) per share basic and fully diluted compared to net income of $0.9 million or $0.06 per share basic and $0.04 per share diluted for the quarter ended September 30, 2010.  

Year-to-Date Results

For the six months ended September 30, 2011, sales increased 12% or $1.8 million to $16.3 million from $14.5 million in the year-ago period. Cost of sales for the fiscal six months ended September 30, 2011 increased by $2.3 million to $12.0 million, an increase of 24%, from $9.6 million for the comparable six month period ended September 30, 2010. Gross margin was 27% in the first six months of fiscal 2012 compared to a gross margin of 34% in the same period in fiscal 2011. Operating expenses for the six months ended September 30, 2011 increased to $3.7 million from $2.1 million for six month period ended September 30, 2010, reflecting an increase of $1.5 million or 72%. Net income was $0.3 million or $0.02 per share basic and $0.01 per share diluted for the six months ended September 30, 2011 as compared to $1.7 million or $0.12 per share basic and $0.08 per share diluted for the same period ended September 30, 2010.

Financial Condition

At September 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 used by operations was $1.0 million for the six months ended September 30, 2011 as compared to cash provided by operations of $1.1 million for the six months ended September 30, 2010. The decrease in operating cash flow was due to the net effect of a decrease in net income, increases in costs incurred on uncompleted contracts, prepaid taxes and other noncurrent assets, partially offset by a decrease in accounts receivable, increases in accounts payable, accrued expenses and deferred revenue during the six months ended September 30, 2011. As of September 30, 2011, the Company had $5.2 million of cash and cash equivalents, and borrowing capability of $2.0 million on its $2.0 million line of credit. Management believes its cash plus undrawn credit capacity are adequate for forecasted capital needs. Long-term debt at September 30, 2011 was $7.5 million representing an increase of $0.9 million, compared to $6.6 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, November 14, 2011. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time:  1-877-941-1427.  International callers should dial +1-480-629-9664.  When prompted by the operator, mention Conference Passcode 4378617.

If you are unable to participate in the call at this time, a replay will be available for one week starting on Monday, November 14, 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 4378617.

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=00007C99.

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 systems. These products are used in a variety of markets including: alternative energy (Solar, Wind and LED), 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