TechPrecision Corporation (OTC:TPCS) Q2 2023 Earnings Call Transcript

Alexander Shen: The answer to the first question is, unfortunately, I’m not going to be able to talk about that part. I’m sorry. That’s I just…

Ross Taylor: stands every three months?

Alexander Shen: That part of it, I really cannot provide anything.

Ross Taylor: Okay. The second part of it?

Alexander Shen: Well, the second part of it, if it were to happen, that would be great. We are encouraged by our prospects. We’re encouraged by our backlog. There is nothing discouraging about any of it.

Ross Taylor: Okay. And you’ve done an excellent job getting Ranor’s operating margins up. Is it realistic to assume that over time, Stadco can move into that same neighborhood, not necessarily the same numbers, but the same neighborhood?

Alexander Shen: I think it’s realistic to assume that we want that.

Ross Taylor: Yes. Okay. And you had an increase in SG&A. You cited it was both kind of full Stadco, but also one-time cost. What kind of quarterly run rate SG&A should we be expecting you guys to do going forward?

Alexander Shen: I think it’s €“ well, let me parse this into a two-part answer. Let me answer first, Tom. So I think it’s premature to figure that out yet because our efforts are really not so much concentrated on run rate and margins, but we need to focus on cash, number one, number two and number three. But I’m not trying to delay the inevitable, but the focus €“ we need to rebuild and get stronger and Stadco is still a turnaround. So that’s kind of my side of the answer operationally and from the sales side and rebuilding customer confidence. I can’t answer the question yet. We want to answer the question. But Tom, how about from your side?

Thomas Sammons: I would just say, first of all, I don’t want to forecast at this point, but there are one-time costs that will go away, and then there’s going to be costs that are going to be inherent in running two businesses. So I do expect SG&A to start coming down. I wouldn’t say to what exact level.

Ross Taylor: Okay. But we should start to see that number decline. And going forward, we can then ask you whether they should continue to decline and figure out what the base level is.

Thomas Sammons: Yes. It used to be our base level was €“ I mean, when it was just Ranor, base level was pretty constant. It’s fairly easy to look ahead. So I think we’ll get to that point again.

Ross Taylor: Yes.

Thomas Sammons: On the combined business, our SG&A will be pretty consistent.

Alexander Shen: Sorry, let me take the microphone back for just a second. So we are still in a rebuilding stage. This is a good conversation and discussion. We are still in a rebuilding stage. We are expending cash into places for CapEx expenditures. So we racked up $1.1 million. This is mostly directed towards rebuilding capacity as well as enhancing current capacity.

Ross Taylor: You’ve jumped into that question.

Alexander Shen: Right, right. So that part of it, on the rebuilding part of it, once we get these things more under our belt, we can better understand what and get closer to answering that question on what the run rate should look like.

Ross Taylor: Of that $1.1 million in CapEx in the last quarter, roughly how much of that was allocated towards Stadco versus Ranor?

Alexander Shen: More than half.

Ross Taylor: The Stadco?

Alexander Shen: Correct.

Ross Taylor: Okay. And backlog since the end of the quarter, has it had any noticeable increase?

Thomas Sammons: The backlog since the end of September 30?

Ross Taylor: Yes.

Thomas Sammons: I wouldn’t say a significant €“ I have not really looked at it too much.

Alexander Shen: Has there been a significant increase? No.

Ross Taylor: Okay. And as part of that problem, the fact that we’re operating under a CR in Congress yet again?

Alexander Shen: No.

Ross Taylor: Okay. Lastly…