Q3 2025 TechPrecision Corp Earnings Call
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Operator: Greetings. Welcome to today's conference call, TechPrecision Corporation Reports Fiscal Year 2025 Third Quarter Financial Results. At this time, all participants are in a listen-only mode.
Speaker Change: Greetings and welcome to today's conference call Tech Precision Corporation reports fiscal year 2025 third quarter financial results. At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad. Please note. This conference is.
Operator: A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.
Speaker Change: Recorded I will now turn the conference over to your host Brett Maas, managing director at Hayden IR, Brett you may begin.
Brett Maas: I will now turn the conference over to your host, Brett Maas, Managing Director at Hayden IR. Brett, you may begin. Thank you.
Speaker Change: Thank you on the call today is Alex Chen Chief Executive Officer, and Bobby Lilly Principal accounting officer before we begin I'd like to remind our listeners that management's remarks may contain forward looking statements, which are subject to 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 for forward looking statements is contained in the private securities.
Brett Maas: On the call today is Alex Shen, Chief Executive Officer, and Bobby Lilly, Principal Accounting Officer. Before we begin, I'd like to remind our listeners that management's remarks may contain forward-looking statements which are subject to 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 for forward-looking statements as contained in the Private Securities Relegation 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.
Speaker Change: It gives you a formula to a 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 managements estimates as of today April eight 2025 Tech precision assumes no obligation to revise or update these forward looking statements.
Brett Maas: In addition, projections as to the company's future performance represents management's estimates as of today, April 8th, 2025. TechPrecision assumes no obligation to revise or update these forward-looking statements.
Brett Maas: With that out of the way, I'd like to turn the call over to Alex Shen, Chief Executive Officer. provide opening remarks.
Alex Chen: With that out of the way, let's turn the call over to Alex <unk> Chief Executive Officer.
Speaker Change: Opening remarks, Alex the floor is yours.
Alex Shen: Alex, the floor is yours. Thank you, Brett. Good afternoon to everyone, and thank you for joining us.
Speaker Change: Thank you Brett and good afternoon to everyone and thank you for joining us.
Alex Shen: On March 31, 2025, the company made an announcement that the Board of Directors appointed Philip Podgorski to serve as the Chief Financial Officer of the company, effective March 31, 2025. As a result, Bobbie Lilly stepped down as the company's interim Chief Financial Officer. Bobbie retains her position as control. Bobby will continue to serve as the company's principal accounting officer for a transition period. This transition period will end on the next business day following the filing of the company's 10-Q for the fiscal quarter ended December 31, 2024.
Speaker Change: On March 31, 2025, the company made an announcement that the board of directors appointed Philip pod Gorski to <unk>.
Speaker Change: Serve as the Chief Financial Officer of the company effective March 31 2025.
Speaker Change: As a result, Bobby Lilly stepped down as the company's interim Chief financial officer lobby retains her position as control.
Speaker Change: Bobby will continue to serve as the company's principal accounting officer for a transition period. This transition period will end on the next business day. Following the filing of the company's 10-Q for the fiscal quarter ended December 31 2000.
Alex Shen: That's the end of the announcement. We filed the 10-Q today, April 8th, 2025. So tomorrow, April 9, 2025, Phil Podgorski will take over the functions of Principal Financial Officer and Principal Accounting Officer from Bobby Lilly.
Speaker Change: 24.
Speaker Change: The end of the announcement.
Speaker Change: We filed the 10-Q today April eight 2025.
So tomorrow April nine 2025, Phyllopod Gorski will take over the functions of principal financial Officer, and principal accounting officer from Bobby Lily.
Speaker Change: Many thanks to Bobby Lilly for stepping in.
Alex Shen: Many thanks to Bobby Lilly for stepping in.
Speaker Change: Let me take a few minutes to share some information about Philip Bob Gorski.
Alex Shen: Let me take a few minutes to share some information about Philip Podgorsky. Since 2013, Phil was the Chief Financial Officer for RTRC. RTRC is the RTX Technology Research Center, a division of RTX Corporation, a public aerospace and defense company. Phil was responsible for all GAP, SEC, for the RTX Technology Research Center. He was also responsible for strategic and scenario planning in collaboration with other stakeholders at RPX, including long-range plans and annual operating budget. Phil has an MBA and Bachelor of Science degree in Accounting from Western New England University. From my perspective, Phil is a seasoned CFO with public company experience in the defense sector and with a proven track record in financial strategy, scenario planning, and operations.
Speaker Change: Since 2013, Phil was the Chief Financial Officer for our T. R C.
Speaker Change: T R C.
Speaker Change: As the RPX Technology Research Center.
Speaker Change: Vision of RPX Corporation, a public aerospace and defense company.
Speaker Change: [noise] wallet RPX Bill was responsible for all GAAP, and SEC and government accounting and reporting related aspects for the RPX Technology Research Center.
Speaker Change: He was also responsible for strategic and scenario planning and collaboration with other stakeholders at RPX, including long range plans and annual operating budgets.
Speaker Change: Phil has an M b, a and Bachelor of Science degree in accounting from Western New England University.
Speaker Change: From my perspective feel is a seasoned CFO with public company experience in the defense sector and with a proven track record and financial strategy scenario planning and operations.
Speaker Change: Timely reporting as one of our fundamentals.
Alex Shen: Timely reporting is one of our fundamentals. The successful addition of fill to TechPrecision is a major step to achieve and consistently maintain compliance.
Speaker Change: The successful addition of Filtertek precision is a major step to achieve and consistently maintain compliance.
Speaker Change: So the fundamental requirement I'm very happy to welcome Phil to Teck decision as our Chief Financial Officer.
Alex Shen: I'm very happy to welcome Phil to TechPrecision as our Chief Financial Officer.
Alex Shen: Okay, with that portion complete, we return to our earnings call format. Third quarter consolidated revenue was $7.6 million, a decrease of less than 1% when compared to the fiscal 2024 third quarter. Every fiscal third quarter is seasonally characterized with higher under-absorbed overhead, primarily due to Thanksgiving and year-end holidays, as well as paid time off days around those holidays and also around hunting season. Third quarter, Raynor revenue was $4.3 million, a slight increase when compared to the same quarter a year ago. Our Raynor segment had operating profit of $1.05 million. Raynor experienced a favorable project mix, enabling us to counter the seasonally higher, under-absorbed overhead, and successfully sustained operating profitability.
Speaker Change: Okay, well that portion complete and we returned to our earnings call format.
Speaker Change: Third quarter consolidated revenue was $7 $6 million, a decrease of less than 1% when compared to the fiscal 2020 for third quarter.
Speaker Change: Every fiscal third quarter is seasonally characterized with higher under absorbed overhead primarily.
Speaker Change: Due to Thanksgiving and year end holidays, as well as paid time off days around those holidays and also around hunting season.
Speaker Change: Third quarter radar revenue was $4 $3 million, a slight increase when compared to the same quarter a year ago.
Speaker Change: Our rain or segment had operating profit of $1.05 million.
Speaker Change: Rain or experienced a favorable project mix, enabling us to counter the seasonally higher under absorbed overhead and successfully sustained operating profitability.
Alex Shen: Third quarter STATCO revenue was $3.3 million, a slight decrease of 2%. compared to the same quarter one year ago. Our STATCO segment had operating loss of 0.85 million. Stadco is continuing to work through remaining legacy pricing problems on core business and experienced an unfavorable project mix for the quarter, which did not help to counter the seasonally higher under-absorbed earnings. 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 shipments. Customer confidence remains high as our consolidated backlog was $45.5 million at December 31, 2024.
Speaker Change: Third quarter stand coal revenue was $3 $3 million, a slight decrease of 2%.
Speaker Change: Compared to the same quarter one year ago.
Speaker Change: Our stead go segment had operating loss of 0.8 5 million.
Speaker Change: Stan co is continuing to work through our remaining legacy pricing problems on core business and experienced an unfavorable project mix for the quarter, which did not help to counter the seasonally higher under absorbed overhead.
Speaker Change: We remain highly focused on aggressive daily cash management, a critical piece of risk mitigation.
Speaker Change: We continue to manage and control expenses capital expenditures customer advances progress billings and final invoicing at shipment.
Speaker Change: Customer confidence remains high.
Speaker Change: Our consolidated backlog was.
Speaker Change: $45 $5 million at December 31, 'twenty 'twenty four.
Speaker Change: We expect to deliver our strong backlog over the course of the next one to three fiscal years with gross margin expansion.
Alex Shen: We expect to deliver our strong backlog over the course of the next one to three fiscal years with gross margin expansion.
Speaker Change: Now I'm going to turn the call over to our principal accounting officer, Bobby Lilly to continue with the review of our third quarter results Bobby.
Bobby Lilly: Now I'm going to turn the call over to our Principal Accounting Officer, Bobby Lilley, to continue with the review of our third quarter results. Bobby? Thank you, Alex. As Alex just mentioned, our second quarter revenue of $7.6 million, or less than 1% lower than the same period a year ago. Consolidated cost of revenue was $6.6 million, or 2% higher than the same quarter a year ago, due primarily to a higher production cost at STADCO. Third quarter cost of revenue was 7% higher at Stadco as higher production costs due to legacy pricing problems on core business and under-absorbed overhead.
Bobby Lilly: Thank you Alex.
Bobby Lilly: As Alex just mentioned, our second quarter revenue of 7.6 million or less than 1% lower than the same period a year ago.
Bobby Lilly: Consolidated cost of revenue was 6.6 million or 2% higher than the same quarter a year ago due primarily to a higher production costs at <unk>.
Bobby Lilly: Third quarter cost of revenue.
Bobby Lilly: It was 7% higher at status quo.
Bobby Lilly: Production costs due to legacy pricing problems on core business and under absorbed overhead.
Bobby Lilly: dampens the growth mark. Consolidated gross profit was $1 million, or 15% lower than compared to the same quarter a year ago, primarily the result of the higher production costs at STADCO. Consolidated SG&A was $1.7 million for the third quarter, or $0.5 million lower, primarily due to the absence of expenses for due diligence work on the terminated VOTA acquisition, which was evident in the same quarter prior year. Consolidated operating loss was 0.7 million or 30% lower than the same quarter a year ago as the absence of expenses for due diligence work on the terminated VOTA acquisition, more than offset STADCO operating losses in the current year third quarter.
Bobby Lilly: Dampens the gross margin.
Bobby Lilly: Consolidated gross profit.
Bobby Lilly: It was 1 million or 16% lower when compared to the same quarter a year ago, primarily the result of the higher production costs at stag toe.
Bobby Lilly: Consolidated SG&A was one 7 million for the third quarter.
Bobby Lilly: Point 5 million lower primarily due to the absence of expenses, so deep diligence work on the terminated Votaw acquisition.
Bobby Lilly: Which was evident in the same quarter prior year.
Bobby Lilly: Consolidated operating loss was <unk> 7 million or 30% lower than the same quarter a year ago.
Bobby Lilly: The absence of expenses for due diligence work on the terminated bowtie acquisition more than offset stand cooperating losses in the current year third quarter.
Bobby Lilly: [laughter].
Bobby Lilly: Third quarter interest expense was up 28% due to increased borrowing under our revolver loan. Net loss was $0.8 million, or $0.08 per share, basic and fully diluted. For the nine months ended, consolidated revenue was $24.6 million or $1.6 million higher than the same period a year ago. due primarily to an increase of $1.2 million in revenue at Stadco. consolidated cost of revenue was $22.3 million, an increase of $2.2 million when compared to the same period a year ago, primarily due to higher production costs at STADCO. consolidated gross profit was $2.2 million, a decrease of 22% compared with the same period a year ago, primarily the result of higher production costs at Stadco.
Bobby Lilly: Third quarter interest expense was up 28% due to increased borrowing under our revolver alone.
Bobby Lilly: Net loss was <unk> 8 million or eight cents per share basic and fully diluted.
Bobby Lilly: For the nine months ended consolidated revenue was two point to 4.6 million or 1.6 million higher than the same period a year ago.
Bobby Lilly: Due primarily to an increase of 1.2 million in revenue it's dead.
Bobby Lilly: Consolidated cost of revenue was $22 3 million, an increase of 2.2 million when compared to the same period, a year ago, primarily due to higher production costs instead toe.
Bobby Lilly: Consolidated gross profit was 2.2 million a decrease of 22% compared with the same period a year ago, primarily the result of higher production costs at <unk> co.
Bobby Lilly: Consolidated SG&A totaled 4.8 million or 6% lower than the same period, a year ago due to the absence of expenses in connection with due diligence work on the terminated Votaw acquisition, which was evident in the same period a year.
Bobby Lilly: Consolidated SG&A totaled $4.8 million, or 6% lower than the same period a year ago due to the absence of expenses in connection with due diligence work on the terminated VOTA acquisition, which was evident in the same period a year ago. consolidated operating loss was $2.5 million for the nine months ended, or a 16% increase due primarily to the operating losses at Stadco. Interest expense was up 9% due to an increase in borrowing under the Revolver loan. Net loss for the nine months ended December 31, 2024, was $2.9 million, or $0.30 per share, basic and fully diluted.
Bobby Lilly: Though.
Bobby Lilly: Consolidated operating loss was $2.5 million.
Bobby Lilly: The nine months ended or a 16% increase due primarily to the operating losses instead co.
Bobby Lilly: Interest expense was up 9% due to an increase in borrowing under the revolver alone.
Bobby Lilly: Net loss for the nine months ended December 31, 'twenty 'twenty, four was 2.9 million or 30 cents per share basic and fully diluted.
Bobby Lilly: Moving on to our financing position, we continue to actively and aggressively manage our cash flow.
Bobby Lilly: Moving on to our financing position, we continue to actively and aggressively manage our cash flow. Financing activities provided $1.2 million in cash through the nine months ended on December 31, 2024, primarily from proceeds from our private placement offering in July of 2024. We used cash in operating and investing activities of $1 million and $0.2 million, respectively. Our total debt was $7.4 million on December 31, 2024, compared to $7.6 million on March 31, 2024. Cash balance on December 31, 2024 was $165,000 compared to $138,000 on March 31, 2024. Working capital was negative on December 31, 2024, as all of our long-term debt is classified as current because of certain debt covenant violations.
Bobby Lilly: Financing activities provided $1 2 million in cash to the nine months ended on December 31, 'twenty 'twenty four primarily from proceeds from our private placement offering in July of 2024.
Bobby Lilly: We used cash in operating and investing activities of $1 million and point 2 million respectively.
Bobby Lilly: Our total debt was 7.4 million on December 31, 2024, compared to 7.6 million on March 31 2024.
Bobby Lilly: Cash balance on December 31, 2024 was 165000 compared to 138000 on March 31 2024.
Bobby Lilly: Working capital was negative on December 31, 2024, and all of our long term debt is classified as current because of certain debt covenant violations.
Alex Shen: With that, I will now turn the call over to Alex. Thank you, Bobby. for those on the call who may not be very familiar with our company. large-scale machined components. The components that we manufacture are customer designed. We sell to customers in two main industry sectors. be friends. and Precision Industrial Markets. predominantly defend. 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.
Alex Chen: I will now turn the call over to Alex.
Bobby Lilly: Yeah.
Bobby Lilly: Thank you Bobby.
Speaker Change: For those on the call who may not be very familiar with our company.
Speaker Change: Precision is a custom manufacturer of precision large scale fabricated components and Chris.
Speaker Change: Precision large scale machine components.
Speaker Change: The components that we manufacture our customer design.
Speaker Change: We sell to customers in two main industry sectors.
Speaker Change: Vince.
Vince: And precision industrial markets predominantly defense.
Vince: We do most of our work in industries that are highly sensitive to a confidentiality.
Vince: Which preclude us from speaking publicly about many things that a company not operating in tech precision specific environment with discuss please understand there are real limits as to what I can discuss and sometimes those limits do change.
Alex Shen: TechPrecision is proud and honored to serve the United States defense industry, specifically naval submarine manufacturing through our Raynor subsidiary and military aircraft manufacturing. through our Stadco subsidiary. we aim to secure and maintain enduring partnership. with our customers. Overall, at both the Raynor and the Stadco subsidiaries, we continue to see meaningful opportunities in our defense sector, as evidenced by the strength of our backlog. We are encouraged, highly encouraged, by the prospects for growing our revenue and increasing profitability in future quarters.
Vince: Tech precision is proud and honored to serve the United States defense industry, specifically naval submarine manufacturing through our rain or subsidiary.
Vince: Military aircraft manufacturing.
Vince: Through our <unk> subsidiary.
Vince: We aim to secure and maintain enduring partnerships with our customers.
Vince: Overall at both the radar and the Stan co subsidiaries, we continue to see meaningful opportunities in our defense sector as evidenced by the strength of our backlog.
Vince: We are encouraged highly encouraged by the prospects for growing our revenue and increasing profitability in future quarters.
Operator: Operator, please open the line for Q&A. Certainly, at this time we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Again, that's star 1 if you wish to ask a question. And one moment please, while we poll for questions.
Speaker Change: Operator, please open the line for Q&A.
Speaker Change: Certainly at this time, we'll be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment that may be necessary to pick up your handset before pressing the star keys again, that's star one if you wish to ask a question on one moment. Please while we poll for questions.
Speaker Change: And the first question today is coming from Charles Neuhauser from Meanwhile, investments Charles Your line is live.
Charles Neuhauser: The first question today is coming from Charles Neuhauser from Mainwall Investments. Charles, your line is live. Thanks. So, I understand that the losses at Stadco are due to previously underpriced or mispriced Contract. So, that opens up a series of other questions, mainly how much longer is it going to take to work through those previously mispriced contracts? And secondly, they're working on previously mispriced contracts, but are they working on any, do they get any new business? Is there additional profitable business that they're working on? That is just not, it's more than offset by the previously mispriced contracts.
Charles Neuhauser: Hey, Thanks, So I understand that the losses that are due to previously.
Speaker Change: Under priced are mispriced.
Speaker Change: Contract.
Speaker Change: So that opens up a series of other questions, mainly how much longer is it going to take to work through those previously mispriced contracts.
Speaker Change: And secondly.
Speaker Change: They're working on previously mispriced contracts, but are they working on any do they get any new business is there.
Speaker Change: Additional profitable business that they're working on that.
Speaker Change: That is just not it's more than offset by the previously mispriced contracts.
Alex Shen: If you could fill us in a little more about what's actually going on out there, I would appreciate it. Okay, that was kind of a combination question. So let me parse it down to the elements, if you don't mind. And I'll probably need some verification that I'm parsing it correctly. Thank you for your questions. How much longer is this going to take? Well, I think if I really knew how to forecast this, I would openly be transparent and telling all of us. I don't know. But also, I think I carefully said that we are working on the remaining...
Speaker Change: If you could fill us in a little more about what's actually going going on out there I would appreciate it.
Speaker Change: Okay that was kind of a combination question. So let me parse it down to the elements. If you don't mind and also probably need some.
Speaker Change: Our application that I'm parsing it correctly.
Speaker Change: Thank you for your questions.
Speaker Change: How much longer is this going to take well.
Speaker Change: I think if I really knew how to forecast there. So I would openly be transparent in telling all of us I don't know.
Speaker Change: But also I think I carefully said.
Speaker Change: We are working on the remaining.
Alex Shen: problems with legacy prices. So I also don't classify this as mispriced, but I classify it as a problem with legacy price. So over the over the...since we... completed our acquisition of Stadco, which was in the August-September timeframe of 2021. We've steadily been working to eliminate these problems with legacy prices. We have some success and have not finished our work, and we would like to continue to do so. get this behind us just as soon as we can. Having said that, why is it taking so long? Well, some of these things are... pretty complicated, and we're dealing with companies that are large and slow in the defense community.
Speaker Change: Problems with legacy pricing.
Speaker Change: So I also don't classify this as mispriced, but I I would classify it as a problem with legacy pricing.
Speaker Change: So over the.
Speaker Change: Over the since we.
Speaker Change: Yeah.
Speaker Change: Completed our.
Speaker Change: Acquisition of <unk>, which was in the August September timeframe of 2021, we've steadily been working.
Speaker Change: To eliminate these problems with legacy pricing.
Speaker Change: We have some success.
Speaker Change: And have not finished our work and we would like to.
Speaker Change: Get this behind US just that soldiers weekend, having said that why is it taking so long well some of these things are.
Speaker Change: Pretty complicated and we're dealing with companies that are.
Speaker Change: Large and slow.
Speaker Change: Defense community.
Speaker Change: How long is it going to take I really don't know a very good answer, but I'll continue to report out, but I do want to.
Alex Shen: How long is it going to take? I really don't know a very good answer, but I'll continue to report out. But I do want to... point out that. I carefully report out and tell all of us that I'm working on the remainder of the legacy pricing problems on core business. So that's one answer for the first part of the question. I think the second part of the question was talking about, are we securing additional contracts that are profitable? The quick answer is absolutely yes. Bear in mind that we are more a custom fab and machining shop, both at Raynor and at the STATCO subsidiary.
Speaker Change: Point out that.
Speaker Change: I carefully.
Speaker Change: Report out and tell all of us that I'm working on the remainder of the legacy pricing problems on core business.
Speaker Change: So that's one answer for the first part of the question I think the second part of the question was talking about are we securing additional contracts that are profitable. The quick answer is absolutely yes.
Speaker Change: Bear in mind that we are a more you know a custom fab.
Speaker Change: Fab and machining shop, both that rain or end.
Speaker Change: <unk> subsidiary.
Alex Shen: as such. when we secure. new business that's a one-off business, it's pretty difficult to price every single one to be profitable every single time. There are also factors that work. a little bit against us. The business is quite lumpy. And when we have this lumpiness and the different project mix... Sometimes it works in our favor, and sometimes it does not work in our favor, as we can see how the quarters reacted differently for Raynor contrasted to STADCO. I hope that gives you some idea of what we are doing. I won't be able to talk about specific customers on specific parts.
Speaker Change: As such.
Speaker Change:
Speaker Change: When we secure.
Speaker Change: New business, that's a one off business, it's pretty difficult to price every single one could be profitable every single time.
Speaker Change: There are also factors that work.
Speaker Change: A little bit against us the business is quite lumpy.
Speaker Change: And when when we have this lumpiness and the different project mix.
Speaker Change: Sometimes it works in our favor and sometimes it does not work in our favor as we can see how the quarters reacted differently for rain or contrast, it to stand cool I hope that gives you some idea of what we are doing.
Speaker Change: I won't be able to talk about specific customers on specific parts of it though.
Alex Shen: That's all right. I wasn't asking about that. So you said you've secured new profitable business at STATCO. Are you actually engaged in working on those contracts, or is this something that's going to be worked on in the future? Do you have the capacity to deal with the, as you call it, problem legacy pricing business as well as new profitable business, or do we have to wait until the old stuff gets taken care of? What's the story there? Okay, I think you asked four questions there, so... have we. Secured business that we've already worked on and shipped?
Speaker Change: I'm, sorry, I wasn't asking you about that so you said you've secured new profitable business at <unk>.
Speaker Change: Are you actually engaged in working on those contracts or is this something that's going to be.
Speaker Change: Worked on in the future do you have the capacity to deal with the as you call. It problem legacy pricing business as well as new profitable business or do we have to wait until the old stuff gets taken care of whats the story there.
Speaker Change: Okay. I think you asked four questions there so.
Speaker Change: Have we.
Speaker Change: Secured business that we've already worked on and ship, yes, we continue to secure business in the future that's profitable that we're going to work on and ship. Yes are we currently working on a new business that we've secured since the acquisition.
Alex Shen: Yes. Are we continuing to secure business in the future that's profitable that we're going to work on and ship? Yes. Are we currently working on a new business that we've secured since the acquisition? It's yes to all three. I hope that answers your question. Yep, thank you. And then I think the other part of the question was really directed at... the legacy pricing problems as we work through them. We don't want to wait until we're done working through them. We want to counteract them and really continue to work with the customer to get us to the right place.
Speaker Change: Its yes to all three.
Speaker Change:
Speaker Change: I hope that answers your question.
Speaker Change: Thank you.
Speaker Change: Yep.
Speaker Change: And then I think the other part of the question was really directed at.
Speaker Change: The legacy pricing problems as we work through them, we don't want to wait till we're done working through them, we want to counteract them and really continue to work with the customer to get us to the right place the defense industry needs us it means both the radar subsidy.
Alex Shen: The defense industry needs us. It needs both the Raynor subsidiary, which is highly focused on submarine manufacturing, and the defense industry also really needs Raynor. and Stadco. to supply the parts and the fixtures to make them. that are very critical to the defense industry. We're single sourced on some items, and being the single source, it's not a good idea to let us fall apart. So we have a very good track record of making good parts and delivering on time. These legacy pricing problems that remain are being worked on and have been diligently worked on on a daily and weekly basis.
Speaker Change: Erie, which is highly focused on submarine manufacturing and the defense industry also really needs.
Speaker Change: <unk> <unk>.
Speaker Change: That's cool.
Speaker Change: To supply the parts and the fixtures to make the parts that are very critical to the defense industry, where single sourced on some items and being the single source, it's not a not a good idea to let us fall apart. So we have a very good.
Speaker Change: Track record of making good parts and delivering on time.
Speaker Change: These these legacy pricing.
Speaker Change: Problems that remain are being worked on and have been diligently work done.
Speaker Change: On a daily and weekly basis it's.
Speaker Change: I request, some more patients, but also I'm not very patient with myself and my subordinates and we're going to do better.
Alex Shen: I request some more patience, but also I'm not very patient with myself and my subordinates, and we're going to do better. I just don't have a very good time frame and forecast of when is this going to finish. We're going to diligently get it. Thank you.
Speaker Change: Just don't have a very good timeframe and forecast of when is this going to finish.
Speaker Change: We're going to diligently.
Speaker Change: Get us there.
Speaker Change: Thanks.
Speaker Change: Thank you. The next question is from Ross Taylor from E. R. S investment partners Ross Your line is live.
Speaker Change: Alex are the problems that stat co. The legacy pricing issues you referenced are they.
Charles Neuhauser: Alex, are the problems that Stadco, the legacy pricing issues you referenced, are they linked to specific production lots? Are they programs? And will moving from one production lot to another by itself improve profitability for Stadco?
Speaker Change: Two specific production lots are they programs and we'll moving from one production lot to another by itself.
Speaker Change: <unk> profitability for <unk>.
Alex Shen: Let me ask the two questions one at a time. Are they linked to a specific? There they're linked to... Production lots? You have two primary programs, we believe, F15EX and CH53K. Are they linked to specific production lots of one or both of those? and now the remaining one needs to get worked on. is your end customer, when you move from one production lot to another, will the movement from the one lot to the other improve your profitability? Have you been able to build greater profitability into contracts for new lots? That's part of the complicated problem when it morphs from one lot to another lot.
Speaker Change: Let me ask the two questions one at a time or are they linked to a specific.
Speaker Change: Customer they're linked to production lots you have you have two primary programs. We believe at <unk> since the age 53 K are they linked to specific production lots of one or both of those.
Speaker Change: Program.
Speaker Change: They were linked to both <unk> and <unk> and now the remaining one needs to get worked on are they linked to production lots, yes, Sir they are.
Speaker Change: So when the <unk>.
Speaker Change: Service that is your end customer when you move from one production lot to another well the movement from the one locked to the other improving your profitability you know some have you been able to build greater profitability into <unk>.
Speaker Change: Contracts for new locks.
Speaker Change: That's part of the complicated problem when it more from one month to another a lot and we've been able to get some traction and I shouldnt be able to report better results I just don't.
Alex Shen: And we've been able to get some traction, and I should be able to report better results. I just don't don't know when exactly. I'm not trying to evade your question, I would like to give more color where I can. And it would be appreciated.
Speaker Change: Don't know when exactly it.
Speaker Change: Okay.
Speaker Change: The I'm not trying to evade your question I would like to give more color where I can.
Speaker Change: And that would be appreciated.
Speaker Change: Patients with regard to staff told me is I think one of the world's rarest commodities from your investors.
Charles Neuhauser: Patience with regard to STATCO is, I think, one of the world's rarest commodities from your investment. Yes, sir. It's my I'm running out of a lot of the patients myself, and I have been directly engaging internally and externally on a weekly basis. That is great. Right now, the Marine Corps, the military is projected to take, I think it's something like 56 CH-53 airframes, delivery of 56 over the next 21 months. I think it's like eight to Israel and the balance to the U.S. Marine Corps. Will you have any problems delivering? You're… what work you do on that program at the volumes that are needed over those next 24, 21 months, if indeed they do demand and need that 56 airframes, additional 56 airframes.
Speaker Change:
Speaker Change: Yes, Sir it's my I'm running out of.
Speaker Change: A lot of the patients myself and I have been directly engaging internally.
Speaker Change: Internally and externally on a weekly basis.
Speaker Change: That is great.
Speaker Change: Right now the.
Speaker Change: <unk>.
Speaker Change: Marine Corps, the military is projected to.
Speaker Change: I think it's something like 56, CH 53 airframes delivery of 56 over the next 21 months that'd be like eight to Israel and the balance to the U S Marine Corps.
Speaker Change: Will you have any problems delivering.
Speaker Change: Sure.
Speaker Change: What work you do on that program at the volumes that are needed over the next 24 21 months. If indeed, they do demand didn't need that 56 additional 56, you know frankly.
Alex Shen: That one I can give you very definite answers. We will be able to deliver to the capacity required. Absolutely. And we're delivering it now. Okay.
Speaker Change: That one I can give you a very definite answers, we will be able to deliver to the capacity required absolutely and we're delivering it now.
Charles Neuhauser: So obviously, you sit somewhere in the production cycle. So the fact is that some of those, some of your components have already been supplied, a lot more will need to be supplied as we roll forward. But that would seem to me to be, I mean, if I look back, I think they've only delivered a relative handful of those airframes so far. So that would be, should result in a If I can solve the remaining legacy pricing problem. will be in. much better shape. And I think it's going to be in tranches. It won't be solved in one fell swoop, but we just need to keep the pressure on and get the company there so we can add value back to both the customers and our shareholders.
Speaker Change: Okay. So obviously you sit somewhere in the production cycle.
Speaker Change: Is that some of those some of your components have already been supplied a lot more will need to be supplied as we roll forward, but that would seem to me to be.
Speaker Change: If I look back I think they've only delivered a relative handful of the airframe. So far so that would be as it should result in a substantial boost to revenues.
Stan: Stan So just from that program alone.
Speaker Change: Right.
If I can solve the remaining legacy pricing problem.
Will it will be in.
Much better shape, and I think it's gonna be in tranches.
Speaker Change: It won't be solved in one fell swoop, but we just need to keep the pressure on and get the company. There. So we can add value back to both the customers and our shareholders.
Speaker Change: Absolutely.
Charles Neuhauser: So one would expect you to see a substantial kick up in revenues as we push forward, which should help absorb your overhead. So that alone should make you more profitable. in STATCO.
Speaker Change: Are these.
Speaker Change: So one would expect you to see a substantial kick up in revenues as we push for which should help absorb your overhead so that alone should make you more profitable in and <unk>. The second question is looking at what you. Just said is that it strikes me as what you're really saying is CH 53 program.
Charles Neuhauser: The second question, looking at what you just said, is that it strikes me as what you're really saying is the CH53 program was originally, I think that contract was signed well before you guys acquired the company. So that might go back to 2019, 2020, a rather different world. And it does sound like what you're running into are problems that were built into that particular, the original particular contract. Is that correct? I'm trying not to only talk about that one customer. But yes, you're correct on the made the acquisition. and we've been struggling with that to reverse that.
Speaker Change: Rich I think that contract was signed world or you guys have acquired the company. So that might go back to 2019 2020, rather different world.
Speaker Change: And it does sound like what you're running into a problem that were built into that.
Speaker Change: The original particular contract is that correct.
Speaker Change: I'm I'm trying not to only talk about that one customer.
Speaker Change: But yes, you are correct on the.
Speaker Change: Overall timing.
The legacy was created essentially before we.
Speaker Change: Made the acquisition.
Speaker Change: Okay.
Speaker Change: I'm struggling with that too.
Reverse that it's.
Speaker Change: We are making headway on the traction has been established and it's taken a while to.
Alex Shen: We are making headway, the traction has been established, and it's taken a while to... really get the ear of the customer and have them. look at the facts. It's been working, we're getting closer and closer. I just don't know when. I wish I did, I'd be able to tell you. I need. Go ahead. I need the numbers to bear us out. Excuse me, Ross. I didn't mean to talk over you. No, it's all right.
Speaker Change: Really get the ear of the customer and have them.
Speaker Change: Look at the facts.
Speaker Change: And it's been working its we're getting closer and closer I, just don't know when I wish I did I'd be able to tell you that.
Speaker Change: Well.
Speaker Change: I need.
Speaker Change: Go ahead, I need the numbers to bear ourselves excuse me Ross I didn't mean to talk over you know, it's all right and then I was going to say well I'm glad you're involved you're getting directly involved more directly involved in it to obviously, you're a customer needs to understand and your customer is trying to build up.
Charles Neuhauser: And I was going to say, one, I'm glad you're getting more directly involved in it. Two, obviously, your customer needs to understand, and your customer is trying to build up an industrial base to support many programs, and so therefore, they need to understand that the private sector, particularly a small public company, needs to actually be able to make money doing what it's doing. You're not supplying Walmart. You're supplying the U.S. military, and so therefore, quality is an issue.
And industrial base to support many programs and so therefore, they need to understand that the private sector, particularly the small public company needs to actually be able to make money doing what it's doing.
Speaker Change: Youre not supplying Walmart <unk> supply in the U S military.
Speaker Change: So therefore quality is an issue.
Charles Neuhauser: Moving away from the CH53K, we're about, or we're seeing a, should be seeing a significant ramp-up in the other major program you appear to have at Stadco, and I only talk about Stadco because, quite honestly, I think it's best described as a sucking chest wound for shareholders since the acquisition. I actually think you probably... between the purchase cost, the expenses around the acquisition, and the losses incurred probably have sunk more money into this than you have market cap currently. Solving STATCO solves TechPrecision's problems, as I see it.
Speaker Change: Moving away from the CH 53, K, we're about overseeing a should be seeing a significant ramp up in the other major program you appear to have at Cowen I only talked about stack because quite honestly.
I think it's best described as a sucking chest warn for shareholders since the acquisition I actually think you probably know.
Speaker Change: Between the purchase cost the expenses around the acquisition and the losses incurred probably have some more money into this when you have market cap currently stuff.
Speaker Change: Solving statohm solves tech precision problems as I see it so looking at this the <unk> is about too.
Alex Shen: So looking at this, the F-15EX is about to, you know, also meaningfully ramp production, same question, any difficulties, any issues that you would have with being able to meet those demands? Well, um... Currently, no. At the last earnings call for the previous quarter, we talked a little bit about machine breakdowns that were affecting us. And those machine breakdowns currently are... have been aggressively beat down to a very minor disruption to throughput and we are We're doing well on our delivery timing. That is one very good point. stride forward that we've been able to hold our ground and continue to deliver.
Speaker Change: Also meaningfully ramp.
Speaker Change: Production.
Speaker Change: Same question and he is any difficulties any issues that you would have with being able to meet those demands.
Speaker Change: Well.
Speaker Change: Currently no.
Speaker Change: At the last earnings call for the previous quarter, we talked a little bit about machine breakdowns that were affecting us and those machine breakdown currently are.
Haven't been aggressively beat down to a very minor disruption to throughput and we.
Speaker Change: We are.
Speaker Change: We're doing well on our delivery timing that is one very good.
Speaker Change: Drive forward that we've been able to hold our ground and continue to deliver.
Alex Shen: and with on-time delivery comes a lot more opportunity and the F-15... is very good for absorbing overhead and Yeah, it's in good shape. It's true. I hope you do more than absorb overhead with it as we move up. Absolutely. And that's why I added the comment that it's in good shape.
And with on time delivery comes a lot more opportunity.
Speaker Change: Hmm.
Speaker Change: <unk>.
Speaker Change: Dx program for Us is.
Speaker Change: It's very good for absorbing overhead and.
Speaker Change: Yeah, it's in good shape.
Speaker Change: Well I hope you do more than absorb overhead with the desk, we move up.
Speaker Change: Absolutely and that's why I added the comment that it's in good shape. Thank you.
Charles Neuhauser: Thank you.
Charles Neuhauser: Real quick before I move to another line is Boeing won the ENGAD. Are you in any way... Would you expect in any way to benefit from NGAD? We'll take no comment as of yet. That would be great. Thank you. Okay, so you're going to say no comments? I'm trying to figure out how to comment without them. Right, exactly.
Speaker Change: Real quick before I move to another line.
Speaker Change: Wine is Boeing.
Speaker Change: Boeing won the end Gad.
Speaker Change: Are you in any way.
Speaker Change: Would you expect in any way to benefit from <unk>.
Speaker Change:
Speaker Change: Yes.
Speaker Change: Well I'll take no comment as a yes.
Speaker Change: That would be great. Thank you.
Speaker Change: So youre going to say no comment.
Speaker Change: [laughter] I am.
Speaker Change: I'm trying to figure out how to comment without.
Speaker Change: No no.
Speaker Change: Right exactly.
Alex Shen: I did want to address probably the other question is are we pursuing new programs, that will be significant as far as tactical priority and strategic priority to the U.S. defense market. And the question to that, the answer to that question would be yes. We're getting traction. on new programs that we were never on before. so new programs to STADCO, and then new programs as a whole, not just. and NGAD, but other new programs coming on. We're finally getting some traction, and it shall be profitable traction. That's great.
Speaker Change: I did want to I did want to address probably.
Speaker Change: Other question is are we pursuing new programs.
Speaker Change:
Speaker Change: That will be significant as far as.
Speaker Change: Tactical priority and.
Speaker Change: Strategic priority to the U S defense market and the question to that the answer to that question would be yes, we are.
Speaker Change: Getting traction.
Speaker Change: On new programs that we were never on before.
Speaker Change: So new programs to stand cool and then new programs as a whole not just <unk>, but other new programs coming on.
Speaker Change:
Speaker Change: It's Oh, we're finally getting some traction and.
Speaker Change: It shall be profitable traction.
Speaker Change: That's great and then are these new types of programs are they.
Alex Shen: Now, are these new types of programs, are they airframes, are they missiles, are they space? Do you see, you know, where are we looking for what? What is the opportunity? as you see it for us. I think the opportunity and some of the synergy that we're really. seeing now between Raynor and Stadco on some of the shared customers is where some of the synergy is beginning to yield some results. So I think there's some There's a portion of it is going to be in the in the Navy area and a portion of it is in stuff that flies.
Speaker Change: Airframes are they missiles are the space do you see.
Speaker Change: Where are we looking for what.
Speaker Change: But what is the opportunity.
Speaker Change: As you see it for us.
Speaker Change: I think I think the opportunity in some of the synergy that were.
Speaker Change: Really.
Speaker Change: Seeing now between <unk> and <unk>.
Speaker Change: <unk> co on some of the shared customers.
Speaker Change: Whereas some of the synergy is beginning to yield some results.
Speaker Change: So I think there is.
Speaker Change: Some.
Speaker Change: There's a portion of it is going to be in the and the Navy area.
Speaker Change: And a portion of it is in stuff that flies.
Charles Neuhauser: Okay, that's really cool. Great, great color.
Speaker Change: Okay, that's really cool.
Speaker Change: Great color also with regard to your customers and your your own industrial base have you <unk>.
Alex Shen: Also, with regard to your customers and your own industrial base, have you, you've in the past talked about receiving aid to buy the call. It's not an area we should expect to see more activity from you in the future where you can use someone else's balance sheet to actually allow you to improve your industrial capacity and your production capacity. Thank you very much for the question. So we recently got funded $4 million more and this is all Raynor centric and none for statco, which brings our grand total of funded completely funded grant money to $21 million, in excess of $21 million.
Speaker Change: You've in the past talked about receiving.
Speaker Change: Paid to buy.
Speaker Change: The equipment, you need where do we stand with that how much money have you received either from your direct customers customer perhaps.
Speaker Change: Of course ski or Boeing or whatever how much if any have you received from the services themselves of the Pentagon.
Speaker Change: To fund new capital equipment and are those.
Is that an area, we should expect to see more activity from you.
Speaker Change: And in the future, where you can use someone else's balance sheet to actually allow you to improve your.
Speaker Change: Industrial capacity and your production capacity.
Speaker Change: Thank you very much for the question. So we recently got funded.
Speaker Change: A $4 million more and this is all rain north centric and none for Stat go which brings our grand total of funds.
Speaker Change: Funded.
Speaker Change: Completely funded grant money to $21 million in excess of $21 million range.
Alex Shen: So basically, you've been granted. a dollar amount equivalent to your market. Yes, you can say that. Yes, yes. Okay, absolutely. Okay, we haven't received anything for STATCO. Is there a reason why that is, and would you anticipate being able to use these types of programs, or is it just that you're not seeing these programs that STATCO into the business? If I can characterize the grants, these are Navy grants. targeted towards submarine and marine industrial base. Okay.
Speaker Change: <unk> been granted.
Speaker Change: Dollar amount equivalent to your market cap.
Speaker Change: Yes, you can see you can say that yes, yes, okay, absolutely want Okay. We haven't received anything for Scott.
Speaker Change: Is there a reason why that is and would you anticipate being able to use these types of programs or is it just that.
Speaker Change: Yes, they're not you're not seeing these programs that.
Speaker Change: That's the end of the business.
Speaker Change: If I can characterize the grants these our navy grants.
Speaker Change: Targeted towards some marine and marine industrial base.
Speaker Change: Okay.
Charles Neuhauser: Well, I will let someone else ask questions. What I will say is, obviously, I'm excited about the opportunities. The last couple of years have been a little bit of a clown show for a lot of reasons. I think that, you know, it seems that you've gotten focused. You've got your energy. Honestly, Alex, you sound a lot better, a lot more upbeat than you have in a long time. And it sounds like we should be looking at a lot of things working our way as we push forward, because obviously, as I said, if you can solve that co-profitability, then that itself will cross a major Rubicon for this company.
Speaker Change: Okay, well I will let someone else ask questions why I will say is obviously.
Speaker Change: Cited about the opportunities the last couple of years have been a little bit of a clown show.
Speaker Change: For a lot of reasons I think.
Speaker Change: It seems that you've gotten focus you got your energy honestly, Alex you sound a lot better a lot more upbeat than you have in a long time.
Speaker Change: And it sounds like we should be looking at a lot of things.
Speaker Change: Working our way as we push forward because obviously as I said, if you can solve that go profitability than that itself will will cross a major group of Congress. This company. Thank you.
Alex Shen: Thank you.
Speaker Change: Thank you.
Speaker Change: Thank you and the next question will be from Richard Greulich from <unk> Capital Advisors. Richard Your line is live alright. Thanks, I think my attention was turned away. When you mentioned what the backlog was could you repeat that please.
Richard Gruelich: And the next question will be from Richard Gruelich from REG Capital Advisors. Richard, your line is live. All right, thanks.
Richard Gruelich: I think my attention was turned away when you mentioned what the backlog was. Could you repeat that, please? $45.5 million is our consolidated backlog as of December 31, 2024. How does that break down between Raynor and Statco? I think you can think of it as about 50-50. It varies a little bit when the ebbs and flows of the business, but it's basically pretty even split between the two subsidiaries. I think you put that in your 10-Q before, I'm assuming it'll be there.
Speaker Change: [noise] $45 $5 million as our consolidated backlog.
Speaker Change: December 31 2024.
Speaker Change: Does that break down between <unk> co.
Speaker Change:
Speaker Change: I think you can think of it as about 50 50.
Speaker Change: Okay.
It varies a little bit when the ebbs and flows of the business, but it's basically.
Speaker Change: Pretty even split between the two subsidiaries.
Speaker Change: Thank you put that in your 10-Q before I am assuming it'll be there again.
Speaker Change: Yeah.
Speaker Change: [noise] that's all.
Richard Gruelich: That's all. Thank you.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Thank you there were no other questions at this time I would now like to hand, the call back to Alex Chen for closing remarks.
Operator: There were no other questions at this time.
Alex Shen: I would now like to hand the call back to Alex Shin for closing remarks. Thank you everyone. Have a great day.
Speaker Change: Yeah.
Alex Chen: Thank you everyone.
Speaker Change: Have a great day.
Speaker Change: Thank you.
Operator: This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change: This does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.