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TC

TECHPRECISION CORP (TPCS)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 FY2025 delivered a clean inflection: revenue rose 10% YoY to $9.48M, gross margin expanded to 22% (from 14% a year ago), and the company posted positive net income of $0.11M ($0.01 EPS), driven by better execution at both Ranor and Stadco and sharply lower SG&A as Votaw-related costs rolled off .
  • Stadco turned profitable in Q4, aided by successful renegotiation of a tranche of legacy pricing, which allowed reversal of certain contract loss provisions ($0.1–$0.25M) and improved drop-through; management emphasized more tranches remain to be negotiated .
  • Backlog remained robust at $48.6M as of March 31, 2025 (vs. $45.5M at Dec 31, 2024 and $50.0M a year ago), with management expecting delivery over 1–3 years and further gross margin expansion .
  • No formal numeric guidance was issued; the key forward catalysts are continued Stadco pricing resets, execution on the defense backlog (including F‑15EX ramp capacity), and margin expansion supported by ~$21M of funded U.S. Navy-related grants at Ranor .

What Went Well and What Went Wrong

What Went Well

  • Margin and profitability inflected: Q4 gross margin rose to 22% and operating income turned positive ($0.37M), yielding net income of $0.11M and $0.01 EPS, a sharp improvement from prior-year Q4 losses .
  • Stadco improvement: “One major driver was a successful negotiation on one portion of the legacy pricing issues on core business,” enabling Stadco to post Q4 operating profit; CFO added Q4 saw reversal of loss provisions of ~$0.1–$0.25M tied to these changes .
  • SG&A discipline: Q4 SG&A fell 53% YoY to $1.72M as Votaw transaction costs lapped out, supporting operating leverage; management highlighted “methodical execution of several long-term initiatives to continuously resecure customer confidence” .

What Went Wrong

  • Balance sheet tightness: Cash remained modest at $0.20M, working capital was negative $1.6M, and total debt was $7.4M due in part to debt covenant violations requiring reclassification of debt as current .
  • Stadco structural cost pressure: Management cited wage inflation and input cost increases as continuing headwinds, with operational variability impacting costs quarter to quarter .
  • Lack of formal guidance/linearity: Deliveries are “lumpy,” and no numeric revenue/EPS guidance was provided; backlog conversion is not expected to be linear, limiting near-term forecasting precision .

Financial Results

Consolidated sequential performance

Metric (USD)Q2 FY2025 (Sep 30, 2024)Q3 FY2025 (Dec 31, 2024)Q4 FY2025 (Mar 31, 2025)
Revenue ($ Millions)$8.95 $7.62 $9.48
Gross Profit ($ Millions)$1.01 $0.99 $2.09
Gross Margin (%)11% 13% 22%
SG&A ($ Millions)$1.50 $1.69 $1.72
Operating Income ($ Millions)$(0.49) $(0.70) $0.37
Net Income ($ Millions)$(0.60) $(0.80) $0.11
Diluted EPS ($)$(0.06) $(0.08) $0.01
EBITDA ($ Millions)$0.21 $0.05 $0.96

YoY (Q4 FY2024 vs Q4 FY2025)

Metric (USD)Q4 FY2024 (Mar 31, 2024)Q4 FY2025 (Mar 31, 2025)YoY
Revenue ($ Millions)$8.60 $9.48 +10%
Gross Profit ($ Millions)$1.23 $2.09 +70%
Gross Margin (%)14% 22% +800 bps
SG&A ($ Millions)$3.69 $1.72 (53%)
Operating Income ($ Millions)$(2.46) $0.37 +$2.83
Net Income ($ Millions)$(5.12) $0.11 +$5.23
Diluted EPS ($)$(0.59) $0.01 +$0.60
EBITDA ($ Millions)$(1.79) $0.96 +$2.75

Segment breakdown (Revenue)

Segment Revenue ($ Millions)Q2 FY2025Q3 FY2025Q4 FY2025
Ranor$4.79 $4.31 $4.68
Stadco$4.22 $3.31 $4.86
Intersegment Elimination$(0.07) $0.00 $(0.07)
Consolidated$8.95 $7.62 $9.48

Segment breakdown (Gross profit)

Segment Gross Profit ($ Millions)Q2 FY2025Q3 FY2025Q4 FY2025
Ranor$1.52 $1.51 $1.28
Stadco$(0.50) $(0.52) $0.81
Consolidated$1.01 $0.99 $2.09

KPIs and balance sheet snapshot

KPIQ2 FY2025Q3 FY2025Q4 FY2025FY2024 YE
Backlog ($ Millions)$48.6 $45.5 $48.6 $50.0
Cash & Equivalents ($ Millions)$0.13 $0.17 $0.20 $0.14
Total Debt ($ Millions)$7.2 $7.4 $7.4 $7.6
Working Capital ($ Millions)$(1.5) $(1.8) $(1.6) $(2.9)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2026Not providedNot providedMaintained (no formal guidance)
Gross MarginFY2026Directional: expansion expectedDirectional: expansion expectedMaintained qualitative outlook
Backlog Delivery1–3 years1–3 years1–3 yearsMaintained
OpEx/SG&AFY2026Not providedNot provided—
OI&E / Tax rateFY2026Not providedNot provided—
Dividend—NoneNone—

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2, Q3)Current Period (Q4 FY2025)Trend
Stadco legacy pricingQ2: Legacy pricing problems and higher costs; under-absorbed OH at Stadco . Q3: Continuing legacy pricing issues, unfavorable mix .Negotiated one tranche; reversed $0.1–$0.25M of loss provisions; Stadco profitable in Q4 .Improving with more tranches to go
Ranor investment/grants—~$21M fully funded Navy-related grants driving equipment and efficiency upgrades .Positive capacity/margin tailwind
Backlog/demandQ2: $48.6M . Q3: $45.5M .$48.6M at 3/31/25; delivery over 1–3 years, expect GM expansion .Stable to up
Cost environmentQ2/Q3: Stadco cost pressure and under-absorption .Wage/input inflation persists; ops variability affects costs .Mixed; structural pressure remains
Internal controls/filings—New CFO focus on on-time filings, controls, integration ; CFO appointed Mar 31, 2025 .Improving governance cadence
Capacity/utilization—Ability to support F‑15EX ramp “Absolutely”; utilization varies; aim to improve .Opportunity to accelerate
Delivery linearity—Backlog conversion will be “lumpy,” not linear .Limits near-term visibility

Management Commentary

  • CEO on Q4 improvements: “Methodical execution… yielded positive impacts to fourth quarter revenue and net income… Consolidated gross margin expanded… Net income was $0.1 million or $0.01 per share.”
  • CFO priorities: “First is on-time filings… Secondly, internal controls. Third, continued integration of both Ranor and Stadco… all three towards improved profitability.”
  • On backlog and margin path: “Customer confidence remains high with our backlog at $48.6 million… we expect to deliver our backlog over the course of the next one to three fiscal years with gross margin expansion.”
  • On Stadco pricing resets: “One tranche has been executed… It’s more than 10% and less than half… There’s more tranches to go.”

Q&A Highlights

  • Stadco turnaround and sustainability: Management stressed the need for multiple consecutive profitable quarters at Stadco to establish a durable trend, with further pricing tranches anticipated .
  • Backlog conversion cadence: Delivery will be non-linear and subject to program/customer timing; lumpiness should be assumed .
  • Program growth/content: Management confirmed ability to meet F‑15EX ramp demand and sees scope to grow content on submarine programs given strong customer relationships .
  • Cost dynamics: Wage and input cost inflation remain headwinds; operational variability (e.g., vacations, backups) can temporarily elevate costs .
  • Capital and execution: Ranor’s ~$21M in U.S. Navy-related grants should support equipment upgrades and efficiency gains; growth focus remains within defense specifications to minimize execution risk .

Estimates Context

  • Wall Street consensus: S&P Global consensus for Q4 FY2025 EPS and revenue was not available; as a result, we cannot assess beat/miss vs Street for this quarter (no consensus dataset was returned for EPS or revenue)*.
  • Implication: In the absence of published estimates, investor models should update for the Q4 inflection (margin/EBITDA positive) and incorporate the qualitative guidance on backlog delivery and expected gross margin expansion.

*Values retrieved from S&P Global.

Key Takeaways for Investors

  • Q4 inflection is credible: positive EPS, strong margin expansion, and EBITDA improvement signal operational progress and SG&A normalization post-Votaw .
  • Stadco is the swing factor: initial pricing progress and provision reversals helped Q4, but more tranches and repeatability are needed to cement a turnaround .
  • Backlog supports multi‑year growth: $48.6M backlog and defense program exposure underwrite revenue visibility; deliveries are lumpy but management expects margin expansion as mix/efficiency improve .
  • Watch balance sheet/liquidity: Negative working capital and modest cash keep execution discipline paramount; continued improvement in cash conversion and covenant remediation are catalysts .
  • Ranor upgrades should lift margins: ~$21M in funded grants for equipment and efficiency at Ranor provide a structural tailwind to throughput and profitability over time .
  • Near-term trading setup: Without formal guidance or consensus, the narrative hinges on incremental pricing wins at Stadco, sequential margin gains, and any disclosures on capacity/utilization tied to defense ramps (e.g., F‑15EX) .
  • Medium-term thesis: Defense concentration with sole/single source positions and a strengthening operational backbone (new CFO, controls) can drive sustained gross margin expansion and operating leverage as backlog converts .