Techprecision Corporation 2027 Q1 Earnings Call

Thank you. On the call today are Alex Shen, Chief Executive Officer, and Phil Podgorski, Chief Financial Officer. Before we begin, I'd like to remind our listeners that management's remarks may contain forward-looking statements which are subject to the risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the company claims the protection of the safe harbor from forward-looking statements and as contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, and therefore we refer you to a more detailed discussion of risks and uncertainties in the company's financial filings with the SEC. In addition, projections as to the company's future performance represents management's estimates as of today, August 13, 2026. TechPrecision assumes no obligation to revise or update these forward-looking statements.

With that out of the way, I'd like to turn the call over to Alex Shen, Chief Executive Officer, to provide opening remarks. Alex, the floor is yours.

Brett, thank you. Hello, and good afternoon to everyone. Thank you for joining us. Fiscal 2027 first quarter consolidated revenue was $9.1 million, 23% higher when compared to $7.4 million in the fiscal 2026 first quarter. Consolidated gross profit totaled $1.4 million, or 36% higher when compared to the first quarter of fiscal 2026, primarily due to higher revenue and gross margin. Fiscal 2027 first quarter Ranor revenue was $5.5 million, 27% higher when compared to the prior year first quarter results. Fiscal 2027 first quarter revenue at Stadco increased by 22% to $4.1 million as we executed on our strategy to improve both customer project mix and gross margin expansion. We remain highly focused on aggressive daily cash management, a critical piece of risk mitigation. We continue to manage and control expenses, capital expenditures, customer advances, progress billings, and final invoicing at shipment.

Our tactical execution focus and success enables us to continuously resecure strategic customer confidence at both subsidiaries. Our Ranor segment continues to execute and install new equipment funded by the $24 million-plus in grants from our U.S. Navy submarine programs-related customers. This sustained cadence of new equipment procurement, delivery, and installation is enabling, and will continue to enable, a reliable, robust, and resilient manufacturing capacity dedicated to submarine programs at Ranor. At both Stadco and Ranor, our air defense and submarine defense customers have expressed their strong confidence as we continue to maintain on-time delivery of quality components. With strong customer confidence, both subsidiaries continue to experience meaningful new capture of business awards from these same customers, adding to our strong $52 million backlog. This $52 million only includes the funded portions of customer purchase orders, with an additional approximately $22 million of unfunded purchase orders.

In addition, our delivery performance is leading both Stadco and Ranor to new quoting opportunities in air defense and submarine defense sectors. The quoting opportunities are twofold. With the same customers that already know and trust our capabilities and with new customers in the air and submarine defense sectors. New quoting opportunities enhance our potential to improve our throughput. For first articles and new work scopes, we are mindful of the uncertainty around the development and prove-out of the manufacturing approach and the fabrication and machining execution. From time to time, when necessary, we submit pricing adjustment requests, and equitable adjustments are adjudicated and approved by our customers. Regarding our backlog, we expect to deliver our $52 million backlog over the course of the next one to three fiscal years with gross margin expansion. We remain on track to meeting our fiscal year 2027 guidance provided in June 2026.

I will now turn the call over to our Chief Financial Officer, Phil Podgorski, to continue with the review of our fiscal 2027 first quarter results. Phil, to you. Thank you, Alex.

As Alex just mentioned, our fiscal 2027 first quarter consolidated revenue increased by 23% to $9.1 million, compared to $7.4 million in the same period a year ago.

Driven on higher revenue at both Ranor and Stadco. Consolidated cost of revenue increased by 21%, in line with our revenue growth, resulting in consolidated gross profit increase of $400,000 in Q1 fiscal 2027 to $1.4 million, primarily due to higher revenue at both segments. Consolidated SG&A decreased by 3% to $1.4 million, primarily on a decrease in professional fees and services. Interest expense decreased by 21% due to lower interest incurred on our loans, as well as lower amortization of debt issuance costs. Net loss was approximately $153,000 for the first quarter, or $0.02 per share on both a basic and fully diluted basis. Moving on to our financial position. As Alex Shen mentioned, we continue to actively manage our cash flow daily. Net cash flow provided by operating and investment activities totaled $1.9 million for the three months ended June 30th, 2026.

Net cash used in financing activities totaled $2 million, primarily to pay down principal under the revolver loan and term loans. As a result, our total debt was $5 million even on June 30th, 2026, compared to $7 million on March 31st, 2026. Cash balance on June 30th was $279,000 compared to $431,000 on March 31st. Now, taking a little deeper dive into the segment performance for the quarter. For Ranor, first quarter revenue was higher by $1.2 million year-over-year, or 27% increase, primarily driven by favorable project mix. The revenue increase resulted in $1.6 million of gross profit for the quarter. For Stadco, Q1 fiscal 2027 revenue increased by $700,000 or 22% increase compared to the same period last year, as we continue to execute on our strategic project mix change at Stadco.

Stadco experienced Q1 year-over-year gross margin improvement as gross profit increased by $300,000 or 65% improvement, mainly due to higher revenue and throughput improvement. As Alex Shen mentioned, we continue to actively work with our customers to reduce the wait times and improve throughput. With that, I will turn it back to Alex Shen.

In closing, for those on the call who may not be very familiar with our company, TechPrecision is a custom manufacturer of precision large-scale fabricated components and precision large-scale machined metal structural components. The components that we manufacture are customer designed. We sell to customers in two main industry sectors, defense and precision industrial markets, predominantly defense. We do most of our work in industries that are highly sensitive to confidentiality, which preclude us from speaking publicly about many things that a company not operating in TechPrecision's specific environment might discuss. Please understand there are real limits as to what I can discuss, and sometimes those limits do change. TechPrecision is proud and honored to serve the U.S. defense industry, specifically naval submarine manufacturing through our Ranor subsidiary, and military aircraft manufacturing through our Stadco subsidiary. We aim to secure and maintain enduring partnerships with our customers.

As noted earlier, the total of completely funded grant money of more than $24 million from our U.S. Navy submarine programs reflects this strong partnership. This commitment represents more than 50% of TechPrecision's market cap of $48 million. Overall, at both Ranor and Stadco, we continue to see meaningful opportunities in the defense sector, as evidenced by the strength of our backlog. We are encouraged by the prospects for growing our revenue and increasing profitability in future quarters. We are showing progress. We have more work to do with our Stadco subsidiary to get into the black. We are targeting to build and sustain a trend. Operator, please open the line for Q&A.