TECHPRECISION CORP (TPCS)·Q1 2026 Earnings Summary

Executive Summary

• Q1 FY26 revenue was $7.38M (-8% YoY) with gross margin up to 14% (from 3% YoY); net loss narrowed to $0.60M and diluted EPS was $(0.06), down sequentially from Q4 FY25’s $0.01 as revenue softened .
• Backlog reached a new milestone of $50.1M with delivery expected over 1–3 fiscal years and management targeting continued gross margin expansion across that period .
• Segment mix: Ranor delivered $1.49M gross profit (35% of segment revenue), while Stadco posted a $(0.46)M gross loss due to timing, one-offs and first-article costs; management cited 35–40% progress renegotiating legacy contracts and may walk away from a small portion of unprofitable work .
• Liquidity and leverage: cash was $0.14M; working capital remained negative at $(0.7)M; total debt was ~$5.8M (down vs $7.4M at year-end), with debt covenant issues keeping debt in current classification .
• Near-term catalysts: continued contract repricing, productivity gains, and backlog conversion; investors should watch Stadco margin trajectory and evidence of multi-quarter profitability string at Stadco, which management views as necessary for trend confirmation .

What Went Well and What Went Wrong

What Went Well

• Double-digit consolidated gross margin (14%) on $7.4M revenue, with gross profit up to $1.0M (from $0.24M YoY), as throughput and productivity improved at both segments .
• Backlog strengthened to $50.1M; management: “We expect to deliver this backlog over the next one to three fiscal years with expectations for gross margin expansion throughout the period.” .
• Ranor continued solid execution: gross profit $1.49M, margin 35%, with improved operating performance and favorable mix .

What Went Wrong

• Revenue declined 8% YoY, primarily due to lower Stadco revenue; Stadco recorded a $(0.46)M gross loss and Q1 operating loss of $(1.2)M, driven by one-offs and first-article costs .
• Working capital remained negative and all long-term debt classified as current due to covenant non-compliance; cash remained tight ($0.14M) .
• Talent constraints and customer-furnished-material timing continued to contribute to lumpiness; management highlighted retention challenges and CFM-driven delays .

Financial Results

Consolidated Results vs Prior Year and Prior Quarter

Sequential Trend (last two quarters plus current)

Segment Breakdown (Q1 FY26 vs YoY)

KPIs and Balance Sheet Highlights

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “Consolidated gross margin expanded to 14% on $7.4 million in revenue... Cost of revenue was lower at both Ranor and Stadco as both segments experienced productivity gains.”
• “Customer confidence remains high with our backlog reaching $50.1 million... We expect to deliver this backlog over the next one to three fiscal years with expectations for gross margin expansion throughout the period.”
• On Stadco drivers: “Lower revenue due to business timing and lumpiness; losses from one-time contracts; losses from specific first article costs... We are actively pursuing countermeasures and requesting adjustments from our clients.”
• On pricing discipline: “There is a likelihood we may walk away from some [contracts]. We just cannot continue to lose money on contracts.”

Q&A Highlights

• Contract repricing progress: Management estimates ~35–40% of problematic contracts addressed; more tranches expected; customers recognize need for vendor health; sole/single-source positioning provides leverage .
• Path to Stadco profitability: Focus on processes/controls, pricing discipline, and pursuing new programs; willingness to say “no” on loss-making work; aim to string multiple profitable quarters to establish a trend .
• Capacity and growth: Pursuits list active across defense programs; ready to accept more work; second shift under consideration; barriers include talent availability and customer-furnished material timing .
• One-off loss reserve: ~$0.25M additional reserve in Q1 for a one-off project, expected to clear in Q2 upon shipment .

Estimates Context

• S&P Global Wall Street consensus coverage for Q1 FY26 (EPS, revenue, EBITDA) was not available for TPCS; we did not find consensus estimates or number of estimates for the quarter. As a result, no beat/miss determination can be made (values retrieved from S&P Global).
• Actuals: Revenue $7.38M; EBITDA $0.24M; Diluted EPS $(0.06) .
• Implication: If coverage expands, estimate models may shift to reflect improved gross margin trajectory and backlog conversion, while monitoring Stadco repricing outcomes and cash conversion .

Key Takeaways for Investors

• Margin inflection amid lower revenue: Double-digit gross margin with improved productivity is a constructive sign; sustained margin gains and backlog conversion are key to near-term sentiment .
• Stadco remains the swing factor: Contract repricing progress (35–40%) is encouraging, but investors should look for multi-quarter profit string at Stadco and evidence of reduced one-offs/first-article losses .
• Backlog at record level: $50.1M backlog provides revenue visibility over 1–3 years; watch delivery cadence and mix for margin drop-through .
• Liquidity tight but improving leverage: Debt reduced vs year-end; covenant issues keep debt current; cash conversion from operations and potential customer advances are critical .
• Operational discipline: Embedded routines, internal audits, and pricing controls suggest improving execution; hiring/retention and CFM timing remain headwinds .
• Near-term trading lens: Without estimates, narrative catalysts are repricing updates, sequential Stadco margin improvements, and bookings; any disclosures of new program wins or customer-funded equipment could move the stock .
• Medium-term thesis: Leveraging sole/single-source positions in defense, plus Ranor’s grant-funded capacity, supports a path to higher utilization and margin expansion; execution consistency at Stadco is the key to re-rating .

Cited sources: Q1 FY26 8-K and press release ; Q1 FY26 earnings call transcript –; Q4 FY25 8-K and call –; Q3 FY25 8-K and call –.