TechPrecision Corporation Q4 FY2026 earnings call

### Financial Overview - Consolidated Q4 2026 revenue was $8.1 million, 15% lower than the year-ago quarter; consolidated gross profit was $1.1 million, 47% lower than the prior year. Full fiscal 2026 operating loss was $1.1 million, a 51% year-over-year reduction driven by improved gross margins and lower SG&A costs. Net loss for the full year was $1.6 million, or $0.17 per basic/diluted share. - The company reduced total debt from $7.4 million (fiscal 2025) to $6.9 million (fiscal 2026), and grew cash holdings from $195,000 to $431,000 year-over-year. SG&A decreased 24% in Q4 2026 and 7% for the full year, driven by lower professional fees and office costs.

### Operational Progress - Ranor is continuing to install new manufacturing equipment funded by over $24 million in grants from U.S. Navy submarine program customers. This equipment investment will expand and strengthen dedicated manufacturing capacity for submarine programs. - The company holds a $52 million funded backlog, with an additional approximately $25 million in unfunded purchase orders. The $52 million funded backlog is expected to be delivered over the next 1 to 3 fiscal years, with expected gross margin expansion. - On-time quality delivery performance has earned customer trust, leading to new quoting opportunities and new business awards in the air defense and submarine defense sectors for both segments.

### Strategic Priorities - Management is actively working to improve Stadco's performance by shifting its strategic project mix away from low-margin one-off projects towards repeat work on U.S. government programs of record. Only two unprofitable legacy contracts remain, both in their final phase of execution for fiscal 2027. - The company maintains a focus on aggressive daily cash management, expense control, CapEx management, and timely customer invoicing to mitigate risk and retain customer confidence.

For the fiscal 2026 fourth quarter: 1. Stadco: Revenue was $4.2 million, a $700,000 (14%) year-over-year decrease driven by a strategic project mix change. Gross profit totaled $28,000, an $800,000 year-over-year decline. Stadco contributed 51.9% of consolidated fourth quarter revenue. 2. Ranor: Revenue was $3.9 million, an $800,000 (17%) year-over-year decrease driven by delays in receiving customer-furnished materials. Gross profit totaled $1.1 million, a 16% year-over-year decline. Ranor contributed 48.1% of consolidated fourth quarter revenue. For the full fiscal 2026 year, consolidated revenue was $31.6 million, a 7% year-over-year decrease, with gross profit up 3% (a 300 basis point improvement) due to improved strategic customer and project mix across both segments.

- Full fiscal 2027 revenue is projected to be between $35 million and $37 million, representing 10%-17% year-over-year top-line growth from fiscal 2026's $31.6 million total revenue. - Full fiscal 2027 EBITDA is projected to be between $3 million and $4 million, which would represent nearly double the 2026 full-year EBITDA of $1.644 million. - The two core defense programs at Stadco are expected to generate a profit in fiscal 2027, representing a major improvement from historical performance. - Management frames 2027's profitability and revenue targets as a critical stepping stone for further margin and revenue expansion in future years, as demand ramps for core defense programs.

- Customer-related delays, including delayed delivery of customer-furnished materials and delayed customer analysis/disposition of non-conformances, have significantly reduced gross profit at both segments, most severely at Stadco. - Stadco remains unprofitable, weighed down by legacy contracts that were incorrectly priced with de-escalation terms during a period of market-wide cost escalation. - The company requires external capital (including customer/government grant funding) to fund the CapEx needed to expand production capacity to meet growing demand for core defense programs, and funding approvals progress slowly. - Most of the company's work is for classified defense programs, which limits the amount of detail management can disclose publicly to investors. - The company's small cash position ($431,000 at the end of fiscal 2026) creates ongoing reliance on debt financing and external funding for capacity expansion.

Q: What is the root of Stadco's ongoing underperformance, and why has it taken so long to resolve? / A: Management cites three core issues: 1) Historical over-reliance on low-margin one-off projects that are difficult to price accurately and act as legacy drag on performance; 2) A number of legacy contracts priced with incorrect de-escalation terms during a period of rising costs; 3) Outdated aged equipment that requires capital investment to improve efficiency. Only two unprofitable legacy contracts remain, and the mix shift to repeat government programs has already produced visible improvements, though Stadco is not yet profitable.

Q: Will the two core U.S. defense programs at Stadco be profitable in fiscal 2027? / A: Management confirms that both core programs will be profitable in fiscal 2027, after years of improvement work to correct pricing and shift to an repeatable project mix. Major strides have been made to resolve legacy issues on these programs, and the result will be positive operating performance starting in 2027.

Q: Why hasn't the company received customer/government capital investment for Stadco capacity expansion, similar to the $24 million in grants Ranor received for submarine programs, especially given expected demand growth for the core aircraft programs? / A: Management confirms that conversations with prime defense contractors and government program managers about CapEx grants for Stadco expansion have been ongoing for months at senior levels. The company has aggressively pursued funding, but the approval process for this type of investment is slow, similar to the multi-year timeline Ranor experienced before securing its Navy grants. Demand for expanded capacity is clear, but no final funding agreement has been reached yet.

Q: Is the 2027 EBITDA target a stepping stone to higher profitability in future years as defense program demand ramps? / A: Management confirms that the 2027 target is the first milestone, and that further margin expansion should follow. Existing corporate infrastructure and SG&A do not need to grow at the same pace as revenue, so incremental revenue will flow through to higher profits. Management's immediate priority is to successfully execute on the 2027 targets first before forecasting further gains.