TECHPRECISION CORP Q2 FY2025 earnings call

Board Changes - Six directors elected at Annual Meeting of Stockholders on Dec 19, 2024. Board appointed Gen Gene Renuad as Chair and Rob Straus as Vice Chair on Dec 23, 2024. John Moore resigned on Jan 13, 2025. ### Remarks from Board - Committees of the Board outlined. Focus on transparency, timely SEC filings, enhanced accountability, and renewed focus on existing operations, especially at Stadco and Ranor. ### Financial Results - Consolidated revenue up 12% to $8.9M; Stadco revenue up 17% to $4.2M; Ranor revenue up 6.7% to $4.8M. Stadco had operating loss; Ranor had operating profit. ### Operational Issues - Stadco faced unexpected higher manufacturing costs, legacy pricing problems, machine breakdowns, and under absorbed overhead costs. Efforts to address cash management, control expenses, and improve operations.

In the second quarter, Stadco's revenue was $4.2 million, a 17% increase compared to the same period last year. Ranor's revenue was $4.8 million, up from $4.5 million in the prior year. Consolidated revenue was $8.9 million, a 12% increase year-over-year. Stadco had an operating loss of $0.8 million due to unexpected higher manufacturing costs, legacy pricing problems, machine breakdowns, and under absorbed overhead costs. Ranor had an operating profit of $1 million primarily due to favorable project mix. Stadco's revenue contribution was approximately 47.2% of consolidated revenue ($4.2M / $8.9M), while Ranor's was approximately 53.9% ($4.8M / $8.9M).

Forward Look - Expect to deliver strong backlog over next 1-3 fiscal years with gross margin expansion. Aim to improve profitability at Stadco by addressing operational issues like unexpected costs, machine breakdowns, etc.

Operational Risks - Unexpected higher manufacturing costs at Stadco. Legacy pricing problems affecting core business. Machine breakdowns disrupting throughput. Under absorbed overhead costs that are difficult to eliminate completely. ### Financial Risks - Negative working capital due to debt covenant violations.

Q: How long and where will it take to get Stadco to sustained profitability?

A: Need to focus on cash management, address unexpected costs on one-off projects, legacy pricing problems, machine breakdowns, and under absorbed overhead. Steps include better front-end organization, prioritizing machine repairs, and minimizing under absorbed overhead.

Q: Are you able to meet demands of military customers for F-15EX and CH-53K run rates?

A: Yes, but it takes time due to years of decline and delayed maintenance. Can reach projected run rates over time by addressing operational issues.

Q: How are you finding opportunities with customers like Huntington Ingalls?

A: Secured three tranches of supplier development funding, with third tranche nearing full funding. Funding equipment grants to add capacity and backup capability at Ranor to relieve bottlenecks.