Executive Summary
TechPrecision Corporation’s QQ1 2025 results show a mixed external environment for a defense-facing metals manufacturer. Consolidated revenue rose 8% YoY to approximately $8.00 million, but gross margin remained an area of significant weakness at about 2.99% as Stadco continued to burden profitability with higher production costs and under-absorbed overhead. The quarter was materially affected by Stadco’s ongoing operational challenges, including the termination of the Votaw Precision Manufacturing acquisition, which contributed a one-time non-cash $400k fair value charge and an operating loss of roughly $1.3 million. Despite these headwinds, Ranor delivered relatively stable top-line performance, and the company reported two consecutive quarters of positive operating cash flow, underscoring ongoing cash management discipline.
Backlog remains a bright spot, with $41.2 million of orders as of 6/30/2024, suggesting meaningful revenue visibility over the next 1–3 fiscal years and the potential for margin expansion as production optimization and absorption improve. However, the balance sheet remains pressured: cash was only about $45k at period-end, negative working capital driven by covenant-related reclassification of debt, and total debt of $12.37 million, translating into a constrained liquidity position. Management emphasized a continued focus on cash management, cost discipline, and risk mitigation while aiming to execute backlog and recapture customer confidence. The long-term thesis hinges on stabilizing Stadco’s cost base, successfully integrating ongoing defense programs, and realizing gross margin improvements as backlog conversion proceeds. Investors should monitor (1) progress resolving Stadco’s cost structure and equipment reliability, (2) covenant relief/financing flexibility, and (3) the cadence of backlog realization and any signs of margin expansion.
Key Performance Indicators
QoQ: -80.57% | YoY:-65.62%
QoQ: 45.46% | YoY:-131.31%
QoQ: 71.49% | YoY:-176.83%
QoQ: 72.41% | YoY:-161.44%
Key Insights
Revenue: $7.9859 million (+8.34% YoY; -7.14% QoQ). Gross profit: $0.2387 million; gross margin 2.99% (YoY -65.6%; QoQ -80.6%). EBITDA: −$0.6346 million; EBITDA margin −7.95% (ratio shown as −0.0795). Operating income: −$1.3411 million; operating margin −16.79% (YoY −131.3%; QoQ +45.5%). Net income: −$1.4602 million; net margin −18.28% (YoY −176.8%; QoQ +71.5%). EPS: −$0.16 (YoY −161.4%; QoQ +72.4%). Backlog: $41.2 million as of 6/30/2024, signaling strong revenue visibility...
Financial Highlights
Revenue: $7.9859 million (+8.34% YoY; -7.14% QoQ). Gross profit: $0.2387 million; gross margin 2.99% (YoY -65.6%; QoQ -80.6%). EBITDA: −$0.6346 million; EBITDA margin −7.95% (ratio shown as −0.0795). Operating income: −$1.3411 million; operating margin −16.79% (YoY −131.3%; QoQ +45.5%). Net income: −$1.4602 million; net margin −18.28% (YoY −176.8%; QoQ +71.5%). EPS: −$0.16 (YoY −161.4%; QoQ +72.4%). Backlog: $41.2 million as of 6/30/2024, signaling strong revenue visibility ahead. Operating cash flow: +$0.1074 million; free cash flow: −$93.8k; capex: −$201.2k. Balance sheet: total assets $35.74 million; total debt $12.37 million; net debt $12.33 million; cash balance $0.045 million; negative working capital with current ratio 0.91 and quick ratio 0.71. ROA: −4.09%; ROE: −18.5%; debt to capitalization: 61.1%; debt to equity: 1.57.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
7.99M |
8.34% |
-7.14% |
| Gross Profit |
238.67K |
-65.62% |
-80.57% |
| Operating Income |
-1.34M |
-131.31% |
45.46% |
| Net Income |
-1.46M |
-176.83% |
71.49% |
| EPS |
-0.16 |
-161.44% |
72.41% |
Key Financial Ratios
operatingProfitMargin
-16.8%
operatingCashFlowPerShare
$0.01
freeCashFlowPerShare
$-0.01
Management Commentary
- Strategy and liquidity focus: "We remain highly focused on cash management, a critical piece of risk mitigation" (Alex Shen). This underscores the company’s priority on preserving liquidity amid a fragile balance sheet and covenant-related constraints.
- Operational headwinds in Stadco: "Stadco had a very poor fiscal year 2025 first quarter ending June 30, 2024, resulting in large part from the terminated Votaw Precision Manufacturing acquisition incurring an operating loss of $1.3 million, primarily due to serious equipment problems" (Alex Shen). This highlights the material impact of equipment failures and the Votaw breakup on profitability.
- Backlog as a moat: "Customer confidence remains high as our consolidated backlog was $41.2 million as of June 30, 2024" (Alex Shen). The backlog provides revenue visibility and potential for future margin recovery if execution improves.
- Cash flow discipline and debt management: "We have maintained two sequential quarters of positive operating cash flow" (Alex Shen) and":"Debt has been reclassified as current or due in less than one year" (Alex Shen via CFO notes). These statements signal operational improvement in cash generation despite liquidity pressures.
- Mixed performance by segment: Ranor showed relative stabilization and growth, while Stadco drove the overall margin compression and higher costs, constraining consolidated profitability. CFO commentary on cost of revenue increase and under-absorbed overhead corroborates this.
Stadco had a very poor fiscal year 2025 first quarter ending June 30, 2024, resulting in large part from the terminated Votaw Precision Manufacturing acquisition incurring an operating loss of $1.3 million, primarily due to serious equipment problems.
— Alex Shen
Customer confidence remains high as our consolidated backlog was $41.2 million as of June 30, 2024.
— Alex Shen
Forward Guidance
- Management outlook centers on backlog-driven revenue realization and potential gross margin expansion over the next 1–3 fiscal years as Stadco’s cost structure is stabilized and absorption improves. The company expects to leverage the strong defense backlog in Ranor and Stadco’s defense work to drive future profitability. However, no explicit numeric targets were provided for margin improvement or revenue growth; guidance is qualitative and contingent on execution.
- Key risks to outlook include: (1) residual Stadco operating inefficiencies and potential capital expenditure needs to restore production reliability, (2) the ongoing impact of the Votaw breakup fee and related accounting treatment, (3) covenant violations that may constrain liquidity and extend refinancing timelines, and (4) defense program exposure which could be subject to budgetary shifts.
- Investors should monitor: (a) stabilization of Stadco’s cost structure and equipment reliability, (b) progress in converting backlog into revenue and improving gross margins, (c) covenant relief/financing flexibility to support working capital needs, and (d) the cadence of quarterly cash flow generation versus working capital needs.