TechPrecision Corporation (TPCS) Q3 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call indicates challenges with Stadco's performance, including revenue declines, higher loss provisions, and unclear management responses regarding bad contracts and growth plans. Despite a slight improvement in operating losses and Ranor's stable performance, the inability to provide clear guidance and low cash reserves overshadow positive aspects. The Q&A revealed management's lack of clarity and inability to address key issues, contributing to a negative sentiment. Given these factors, the stock price is likely to experience a negative reaction in the short term.
Key Financial Performance
Stadco revenue $2.9 million with an operating loss of $1.2 million. Compared to the same period a year ago, Stadco losses were higher by $0.6 million. The decrease in revenue and increase in losses were due to delays in receiving customer furnished materials, unfavorable project mix, higher provisions for projected contract losses, and some equipment downtime.
Consolidated revenue $7.1 million, 7% lower compared to $7.6 million in the fiscal 2025 third quarter. The decline was attributed to lower revenue at Stadco.
Consolidated gross profit $0.4 million, $0.6 million lower compared to the third quarter of fiscal 2025. The decrease was due to lower revenue and higher loss provisions at Stadco.
Ranor revenue $4.4 million with an operating profit of $1.5 million, in line with the prior year third quarter results.
Consolidated SG&A $1.7 million, increased by 3% due to an increase in stock-based compensation, which more than offset a decrease in outside professional services.
Net loss $1.5 million for the third quarter or $0.15 per share on a basic and fully diluted basis.
Nine months consolidated revenue $23.6 million, 4% lower compared to the same period a year ago. The decline was due to lower revenue at Stadco.
Nine months consolidated cost of revenue $19.7 million, $2.6 million lower than the same period a year ago due to favorable customer mix and achieved productivity gains at both Ranor and Stadco.
Nine months gross profit Increased by $1.6 million or 7 percentage points due to favorable customer mix and achieved productivity gains.
Nine months SG&A Decreased by 1% as lower office costs more than offset higher corporate unallocated expenses.
Nine months consolidated operating loss $0.9 million, decreased year-over-year by 65% or $1.6 million, primarily due to improved margin drop-through.
Nine months net loss $1.2 million or $0.13 per share on a basic and fully diluted basis.
Net cash provided by operating and investing activities $0.6 million for the nine months ended December 31, 2025.
Net cash used in financing activities $0.8 million, primarily to pay down principal under revolving loan and term loans.
Total debt $6.7 million on December 31, 2025, compared to $7.4 million on March 31, 2025.
Cash balance $50,000 as of December 31, 2025, compared to $195,000 on March 31, 2025.
Ranor third quarter revenue Up year-over-year by 1% with strong margin growth across all projects, contributing $1.5 million in gross profit for the quarter.
Stadco third quarter revenue Decreased by $0.3 million compared to the same period last year, primarily due to delays in receiving customer furnished materials, unfavorable project mix, and some equipment downtime.
Stadco third quarter gross profit Decreased by $0.6 million year-over-year due to lower revenue and higher provision for contract losses.
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Operating Highlights
New grant for Ranor: Ranor was awarded a new grant of just over $3.2 million, bringing the total funded grant money to over $24 million from U.S. Navy submarine programs-related customers.
Defense sector opportunities: Both Ranor and Stadco are experiencing new quoting opportunities and meaningful new business awards in air defense and submarine defense sectors, contributing to a strong $46 million backlog.
Operational challenges at Stadco: Stadco faced delays in receiving customer-furnished materials, unfavorable project mix, higher provisions for projected contract losses, and equipment downtime, leading to a revenue decrease to $2.9 million and an operating loss of $1.2 million in Q3 fiscal 2026.
Cash management and expense control: The company is focused on aggressive daily cash management, controlling expenses, capital expenditures, customer advances, progress billings, and final invoicing at shipment.
Focus on defense industry: TechPrecision continues to prioritize partnerships in the defense sector, particularly naval submarine manufacturing through Ranor and military aircraft manufacturing through Stadco.
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Risk or Challenges
Delay in receiving customer furnished materials: This has caused delays in revenue recognition and a drop in revenue for Stadco.
Unfavorable project mix: This has negatively impacted Stadco's financial performance, contributing to higher operating losses.
Higher provisions for projected contract losses: Stadco faced increased provisions for contract losses, further straining its financial results.
Equipment downtime: Although limited, equipment downtime has contributed to operational inefficiencies at Stadco.
Legacy contracts and underpriced one-time contracts: Stadco continues to face challenges with unfavorable legacy contracts and underpriced one-time contracts, impacting gross margins and profitability.
Cash flow constraints: The company reported a low cash balance of $50,000 as of December 31, 2025, which could limit operational flexibility.
Debt levels: Total debt remains at $6.7 million, which, while reduced, still represents a financial burden.
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Guidance & Outlook
Revenue and Profitability Outlook: The company expects to deliver its $46 million backlog over the next one to three fiscal years with gross margin expansion. Management is encouraged by the prospects of growing revenue and increasing profitability in future quarters.
Defense Sector Opportunities: Both Ranor and Stadco subsidiaries are experiencing meaningful new business awards in air defense and submarine defense sectors, leading to new quoting opportunities and adding to the backlog.
Grant Funding and Market Confidence: Ranor has been awarded over $24 million in fully funded grant money from U.S. Navy submarine programs-related customers, representing more than 50% of TechPrecision's market cap. This reflects strong customer confidence and is expected to support robust manufacturing capacity for submarine programs.
Operational Improvements at Stadco: The company is actively working to recover and reprice unfavorable legacy contracts at Stadco, aiming to improve its financial performance and bring the subsidiary into profitability.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How much more in the way of bad contracts or legacy contracts does Stadco have left to work through?
A:The management could not provide an exact quantification of the remaining bad contracts. They mentioned working through operational, sales, and financial teams to capture expected contract losses. They are attempting to encapsulate all losses in their loss reserves, but there is uncertainty due to time elements and customer decisions.
Q:What is the growth plan to drive revenue beyond the $7 million to $9 million quarterly range?
A:The management stated that they are filling the backlog with new business priced better and working with legacy customers like Sikorsky to ensure profitability. They are also focusing on new part numbers and long-term programs of record. However, they could not provide a clear timeline for breaking out of the $7 million to $9 million range.
Q:What are the problems with product mix, and how much of it is customer-controlled versus management-related?
A:The product mix issue is isolated to Stadco and is heavily influenced by delays in customer-furnished materials. This affects facility utilization and shifts focus to less profitable contracts. Management acknowledged the challenges of custom and precision fabrication, which involves variability and is not a mass production process.
Q:Are there contractual protections in place to safeguard against customer-related issues?
A:Management stated that there are some contractual protections in place, but they acknowledged the need to strengthen these protections and be more selective with customers. They emphasized the importance of avoiding detrimental contracts and focusing on customers willing to collaborate.
Q:How does the company plan to address scalability given the specialized nature of its operations?
A:The company plans to focus on repeating part numbers and long-term programs of record to achieve scalability. They aim to eliminate one-time projects and refine processes for repeat orders. Cross-utilization between Stadco and Ranor is also part of the strategy to gain a foothold in scalable operations.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers to several questions, including the exact quantification of remaining bad contracts, a clear timeline for breaking out of the $7 million to $9 million revenue range, and specific details about contractual protections. Their responses often lacked clarity and were filled with generalities or vague assurances.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Director sir
Instructions reminder
Interest interest
Mr Managing
Navy submarine
SGA increase
SGA month
Stadco Consolidated
Stadco factor
Stadco loss
TechPrecision market
activity
afternoon Stadco
article number
backlog portion
cadence procurement
cap Customer
capacity submarine
contract loss
customer material
customer mix
delivery
equipment downtime
interest expense
loss share
margin drop
material project
mix productivity
period Stadco
period customer
productivity gain
project mix
provision contract
segment
share basis
submarine program
term loan
TPCS Transcript
TechPrecision Corporation (TPCS) Q3 2026 Earnings Call Transcript
Unknown2-17
The earnings call indicates challenges with Stadco's performance, including revenue declines, higher loss provisions, and unclear management responses regarding bad contracts and growth plans. Despite a slight improvement in operating losses and Ranor's stable performance, the inability to provide clear guidance and low cash reserves overshadow positive aspects. The Q&A revealed management's lack of clarity and inability to address key issues, contributing to a negative sentiment. Given these factors, the stock price is likely to experience a negative reaction in the short term.
TechPrecision Corporation (TPCS) Q2 2026 Earnings Call Transcript
Unknown11-14
The earnings call reflects mixed signals. Financial performance shows some positive trends, such as improved margins and net income, but also highlights ongoing challenges at Stadco with one-off contracts and first article issues. The Q&A section reveals management's uncertainty about specific opportunities and unresolved issues, which could temper investor enthusiasm. The absence of a market cap makes it difficult to predict exact stock movement, but the overall sentiment leans towards a cautious outlook, suggesting a neutral stock price reaction.
TechPrecision Corporation (TPCS) Q1 2026 Earnings Call Transcript
Unknown8-22
The earnings call highlights several concerns: an 8% revenue decline, operating losses at Stadco, significant debt, and cash flow issues. Despite some improvements in gross profit and operational efficiencies, the unresolved legacy contracts and talent retention challenges pose risks. The Q&A section lacked clarity, suggesting management's uncertainty. Overall, the negative financial indicators and unresolved risks outweigh positive elements, leading to a negative sentiment.
Earnings call transcript: TechPrecision Q3 2025 sees revenue dip, net loss
Unknown4-8
The earnings call reveals several negative factors: a decrease in quarterly revenue, higher production costs, increased interest expenses, and ongoing legacy pricing issues. The absence of shareholder return initiatives and vague management responses in the Q&A add to concerns. Despite securing profitable contracts and receiving significant funding, the unresolved pricing problems and lack of clear guidance overshadow positive aspects, indicating a likely negative stock price reaction.
TPCS Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
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Why do some answers appear as “Unclear” or “Inaudible”?
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
