Brett Maas - Hayden IR Alex Shen - Chief Executive Officer Tom Sammons - Chief Financial Officer

Ross Taylor - Somerset Capital

Greetings, and welcome to the TechPrecision Corporation Second Quarter 2016 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brett Maas.

Thank you. On the call today is Alex Shen, Chief Executive Officer, and Tom Sammons, Chief Financial Officer. The call is also being simulcast on the Company’s website www.techprecision.com. Before we begin, I’d like to remind our listeners that management’s remarks may contain forward-looking statements which are subject to risks and uncertainties and management may make additional forward-looking statements in response to your questions. Therefore, the Company claims the protection of the Safe Harbor for forward-looking statements as contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today and therefore we refer you to a more detailed discussion of risks and uncertainties in the Company’s financial filings with the SEC. In addition, projections as to the Company’s future performance represent management’s estimates as of today, November 16, 2015. TechPrecision assumes no obligation to revise or update these forward-looking statements. With that out of the way, I’d like to turn the call over to Alex Shen, Chief Executive Officer, to provide opening remarks. Alex?

Thank you, Brett. Good day to everyone and thank you for joining us. The second quarter of fiscal year 2016 was another quarter of operational and financial progress, as we delivered our second consecutive quarter of net profit and expanded our sales order backlog by approximately $3 million in the last six months. This is the second profitable quarter the Company has reported since June 30, 2011 and the second profitable quarter since I joined the Company, back in late June 2014. We achieved this result with our consistent sharp focus on productivity initiatives, resource realignment, and top-line growth with key customers. Our continued efforts with our core customers enabled us to expand our backlog at September 30, 2015 to approximately $17.5 million, compared to $14.3 million at March 31, 2015. We improved profitability in the second quarter of fiscal year 2016 on a sales volume that was 10% lower than the same period last fiscal year. We ended Q2 fiscal year 2016 with a 25% decrease in selling, general and administrative expense, and a net profit of 6% compared to a net loss of 14% for Q2 fiscal year 2015. I would now like to welcome Tom Sammons to his first conference call with TechPrecision. Tom was recently promoted to Chief Financial Officer last month. After joining Ranor earlier this year as Vice President of Finance. Tom brings 19 years of financial and operational leadership experience in growth, turnarounds and mergers and acquisitions in the metal fabrication and contract manufacturing sectors. With his industry relevance and hands-on approach, Tom has integrated well with the management team. We have also begun moving the headquarters of TechPrecision to Westminster, Massachusetts, at Ranor, where both Tom Sammons and I are located. I look forward to working with Tom as Chief Financial Officer as we continue on our path to execute and maintain operational run rate improvements, improve gross margins and increase the amount of cash generated from operations. Tom welcome on Board.

Thank you, Alex. I am very excited about the opportunity to continue working with Alex and the Ranor team on rebuilding and strengthening the Company. It has been great to see the progress that has been made since Alex has taken over the leadership. Today I will recap the three months results for the quarter ended September 30, 2015. Net sales were $4.1 million, compared with $4.6 million in the same fiscal quarter one year ago. The decrease was due to lower sales in the Company’s precision industrial group and defense group partially offset by increased sales in the Company’s energy group. Gross margins for the second quarter of fiscal year 2016 increased to $1.4 million compared with $0.9 million for the second quarter of fiscal 2015. The improvement can be attributed to lower labor and overhead costs as well as the absence of contract losses. Total SG&A for the fiscal quarter of 2016 was $0.9 million, 25% lower when compared with the second quarter costs of $1.2 million in the prior year. SG&A compensation expense were lower due to reduced headcount and lower outside advisory service costs. Turning to net income. Our net income for the quarter was approximately $255,000 or $0.01 per share basic and fully diluted for the three months ended September 30, 2015, as compared to a net loss of about $649,000 or $0.03 million per share basic and fully diluted for the three months ended September 30, 2014. This is based on a share count of approximately 26.2 million both basic and fully diluted shares, fiscal ‘15 second quarter per share amounts are based on 24.7 million basic and fully diluted shares outstanding. Now for cash flow recap, we generated approximately $414,000 in positive operating cash flow during the second fiscal quarter of 2016. We finished the quarter with $1.6 million in cash and cash equivalents. As Alex alluded to earlier, our sales order backlog at September 30, 2015 was approximately $17.5 million compared with the backlog of $14.3 million at March 31, 2015. This backlog excludes orders cancelled by a customer that filed for bankruptcy, subsequent to March 31, 2014. With that, I’d like to now turn the call back over to Alex. Alex?

Thank you, Tom. Moving forward, we intend to maintain the sharp focus that got us to this point of our recovery. We plan to increase our backlog and focus on new business contracts which utilize our core competencies in custom, large scale, high precision fabrication and custom, large scale, high precision machining with our core customers, which leverage our established expertise, certifications and qualifications in the defense, nuclear and precision industrial sectors. We must continue to execute and maintain operational run rate improvements to improve gross margins and increase the amount of cash generated from operations. I would now like to open up the call for questions and answers.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from Ross Taylor with Somerset Capital. Please proceed.

Alex, congratulations on another excellent quarter and continued progress in getting everything turned around and moving this Company back into direction that should have been a long time ago.

Thank you, Ross.

Could you comment on a couple of things? First, the nature of the backlog, with the backlog growing as it is, are there particular -- is it concentrated in particular areas, particular customers, how broad is it, and what you see going forward with your ability to continue to grow it?

Well, that’s several questions, let me attack each one of them and answer back one-by-one. So, as far as the concentration, the concentration closely matches what we are targeting, which is in the defense, nuclear, and precision industrial sectors in that priority. So primarily defense, second priority unclear, third priority precision industrial. As far as how broad it is, our concentration really is we want to concentrate on our key customers and our core customers. So, perhaps broad is not the best description of this backlog.

And, what I’m trying to get at is, is this -- is the backlog primarily with one or two customers or is it -- I mean would we be looking at this backlog substantially coming from 5 or 10?

I would say none of those numbers that you said. But no, the diversification amongst the three sectors that we’re targeting, it’s more than 10 customers.

Okay, great. That’s fantastic. Also if you…

And then the last part of your question was, can you guys keep this up. Yes, we can.

Okay. In your release, you comment about the fact that you’re working to try to convert the short-term debt structure that matures end of this year beginning of next year, in the long term. What kind of time horizon do you see doing that and what hurdles beyond the obvious exist between here and there do you think?

Well, I think the time horizon is really coming up upon us because that’s when the debt matures. As far as hurdles, I will ask Tom to comment on hurdles.

I don’t see really hurdles for us at this point. We’re working to address the debt as that’s coming due in December.

Okay. And obviously you’ve shown that you can operate this business cash flow positive and in fact profitably, the last couple of quarters I would assume that would carry some weight in the refi?

That would probably doesn’t hurt, right.

Okay. Well, keep…

I do want to take this opportunity to thank you, Ross, and for your continued support. And this is the second point now, you know?

Yes.

Two points make a line. So, now we’ve got the line.

And one more makes a trend.

You bet. Thank you.

And as you know that we’ve said that the stock price obviously seem to reflect something other than the fundamental outlook we think for the business under your aegis. Can you comment on what -- how many shares of the convertible might have been converted during the quarter?

I don’t know that actually.

I believe I have it here. It was 1,927,000 shares deferred that were converted.

What does that leave outstanding?

There is none outstanding right now.

Okay, cool. Thank you very much.

Let me reframe that. That was -- 1.9 million was converted in the first six months of the year.

Was anything converted do you know in the third quarter?

Third quarter, not.

Or the fiscal, the quarter that just ended, how much of it was converted, I think calendar year? Sorry.

Yes. That I don’t have off hand.

Okay, great. Well, thank you gentlemen. Keep up the good work. And look forward to hearing that you’ve gotten the refi taken care of.

[Operator Instructions] Our next question comes from Steve Lipstein, [ph] private investor. Please proceed.

Hey, guys. Really just wanted to call in and say congratulations. It’s been a long time to hear good news like this. So, first I wanted to say congratulations. Got a -- just recent political events and so there has been -- geopolitically there has been more tension out there which has created the call for more defense spending. Want to know if that creates opportunities for the Company? And also oil prices have dropped significantly, will that be a headwind in the nuclear business now with oil being cheaper?

I think we don’t know enough to comment on either of those. We’re a small business, a small subcontractor.

Okay, alright. That’s fair. Again, the call was more just to say congratulations, and keep up the great work.

There are no further questions. I would like to turn the floor back over to management for closing comments.

We don’t have any closing comments. Thank you very much for your participation.

This concludes today’s teleconference. You may disconnect your lines at this time. And thank you for your participation.