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DATE
Tuesday, February 17, 2026 at 4:30 p.m. ET
CALL PARTICIPANTS
- Chief Executive Officer — Alexander Shen
- Chief Financial Officer — Phillip E. Podgorski
TAKEAWAYS
- Consolidated Revenue -- $7.1 million, a 7% decrease compared to the prior-year period, attributed primarily to reduced revenue at STADCO.
- STADCO Segment Performance -- Revenue of $2.9 million and operating loss of $1.2 million; operating loss increased by $600,000 compared to prior year due to delayed customer-furnished materials, unfavorable project mix, higher provisions for contract losses, and equipment downtime.
- Raynor Segment Performance -- Revenue of $4.4 million and operating profit of $1.5 million, consistent with the prior year; year-over-year revenue increased by 1% with improved margin drop-through contributing to gross profit.
- Consolidated Gross Profit -- $400,000, down $600,000 from the year-ago period due to lower revenue and higher loss provisions at STADCO.
- SG&A Expenses -- Increased by 3% to $1.7 million, driven by higher stock-based compensation offset by reduced outside professional services.
- Net Loss -- $1.5 million, or $0.15 per share, reported for the quarter on a basic and diluted basis.
- Backlog -- $46 million in funded backlog, expected to be delivered over the next one to three years with management targeting gross margin expansion.
- Funded Grant Proceeds -- Raynor received a new grant of just over $3.2 million, raising total fully funded grant money to over $24 million from U.S. Navy submarine program customers.
- Debt and Cash Position -- Total debt was $6.7 million as of December 31, 2025, down from $7.4 million as of March 31, 2025; cash balance was $50,000 compared to $195,000 at March 31, 2025.
- Operating Cash Flow -- Net cash provided by operating and investing activities was $600,000 for the nine months ended December 31, 2025, while $800,000 was used in financing activities to pay down principal under revolver and term loans.
- Customer Relationships -- Management highlighted "strong confidence" from customers at both subsidiaries and noted recurring new quoting and business awards in the air defense and submarine defense sectors.
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RISKS
- STADCO experienced higher operating losses due to contract delays, unfavorable project mix, and continued legacy contract losses; management stated the period was "unexpectedly bad, and worse, much worse than our expectation".
- Management acknowledged ongoing headwinds with underpriced one-time and legacy contracts at STADCO and cautioned, "can I guarantee that they are completely behind us? No."
- Low cash balance of $50,000 as of December 31, 2025, implies limited liquidity flexibility.
- Management was unable to provide a definitive timeline for breaking above the $7 million to $9 million quarterly revenue range despite noting the importance of higher top-line growth for sustainable profitability.
SUMMARY
TechPrecision Corporation (TPCS +1.60%) reported a quarterly decline in consolidated revenue, with the STADCO segment driving most of the downside due to legacy contract issues and customer material delays. Management emphasized focused daily cash management and highlighted continued strong relationships with core defense customers. A significant funded backlog of $46 million and over $24 million in Navy submarine grants provide future revenue visibility, yet near-term cash levels remain low. The company stressed its ongoing strategy to shift toward recurring, better-priced contracts and deeper customer partnerships, especially with Sikorsky, but acknowledged persistent challenges in eradicating unprofitable legacy projects and scaling revenue above current levels.
- STADCO's contract loss provisions include recently revised estimates following customer-required rework on longstanding projects.
- CEO Shen stated, "Our plan is solid. Okay. We need to eliminate the risks that bite us. We will continue to do so."
- Management identified the transition away from one-time projects and toward programs of record with recurring part numbers as a crucial path to long-term scalability and profitability.
- Customer selection discipline and added contractual protections are intended to reduce future exposure to detrimental contract terms; CEO Shen said, "We agree, and those contracts, new contracts coming up, we cannot accept them if they are detrimental and harmful to STADCO or to Raynor."
INDUSTRY GLOSSARY
- Customer-furnished materials: Materials supplied by a customer for use in manufacturing their contracted products, for which delays or quality issues can affect production schedules and profitability.
- Programs of record: Long-term, often government-backed, procurement programs with ongoing, repeat orders for standardized components or assemblies.
Full Conference Call Transcript
Alexander Shen: Thank you, Brett. Good afternoon to everyone, and thank you for joining us. For the third quarter, STADCO revenue decreased and operating losses increased. This was due to four factors. One, delay in receiving customer-furnished materials, which delays revenue and dropped revenue. Two, unfavorable project mix. Three, higher provisions for projected contract losses, and four, some, not a lot, but some equipment downtime. Third quarter revenue at STADCO was $2,900,000 with operating loss of $1,200,000. Compared to the same period a year ago, STADCO losses were higher by $600,000. Overall, fiscal 2026 third quarter consolidated revenue was $7,100,000, or 7% lower when compared to $7,600,000 in the fiscal 2025 third quarter.
Consolidated gross profit totaled $400,000, or $600,000 lower compared to the 2025. Fiscal 2026 third quarter Raynor revenue was $4,400,000 with operating profit of $1,500,000, in line with the prior-year third quarter results. We remain highly focused on aggressive daily cash management, a critical piece of risk mitigation. We continue to manage and control expenses, capital expenditures, customer advances, progress billings, and final invoicing at shipment. Our tactical execution focus and success enables us to continuously resecure strategic customer confidence at both segments. Our Raynor segment was very recently awarded a new grant of just over $3,200,000. This brings a total of completely funded grant money to over $24,000,000 from our U.S. Navy submarine programs-related customers.
Raynor continues to execute a cadence of sustained procurement, delivery, and installation of new equipment, which enables a reliable, robust, and resilient manufacturing capacity dedicated to submarine programs. This over $24,000,000 represents more than 50% of TechPrecision Corporation's market cap of $45.5 million. Customer confidence remained high. At both STADCO and Raynor, our customers have expressed their strong confidence as we continue to maintain on-time delivery of quality components. This delivery performance is leading both STADCO and Raynor to new quoting opportunities in air defense and submarine defense sectors with the same customers that already know and trust our capabilities.
Both subsidiaries are continuing to experience meaningful new capture of business awards from these same customers, adding to our strong $46,000,000 backlog. This backlog only includes the funded portions of customer purchase orders. We expect to deliver this $46,000,000 backlog over the course of the next one to three fiscal years with gross margin expansion. And now I will turn the call over to our Chief Financial Officer, Phillip E. Podgorski, to continue with the review of our third quarter and nine months ended fiscal 2026 results. Phil?
Phillip E. Podgorski: Thank you, Alex. As Alex just mentioned, for our fiscal 2026 third quarter, consolidated revenues decreased by 7% to $7,100,000 compared to $7,600,000 in the same period a year ago as revenue fell short at STADCO. And Alex had pointed out what those four factors were. Consolidated cost of revenue increased by 1% or less than $1,000,000, I mean, $1,100,000. Consolidated gross profit decreased by $600,000 in Q3 fiscal 2026 to $400,000 due to lower revenue and higher loss provisions at STADCO. Consolidated SG&A increased by 3% to $1,700,000 as an increase in stock-based compensation more than offset a decrease in outside professional services.
Fiscal 2026 third quarter interest expense was lower as interest cost decreased for term loans and for borrowing under our revolver. Net loss was $1,500,000 for the third quarter, or $0.15 per share on a basic and fully diluted basis. For the nine months ended 12/31/2025, consolidated revenue was $23,000,000, or 4% lower when compared to the same period a year ago. Consolidated cost of revenue was $19,700,000, or $2,600,000 lower than the same period a year ago due to favorable customer mix and achieved productivity gains at both Raynor and STADCO. As noted, the favorable customer mix and achieved product increased gross profit by $1,600,000, or seven percentage points.
SG&A decreased for the nine months ending December 31 by 1% as lower office cost more than offset higher corporate unallocated expenses. Consolidated operating loss for the nine months ended 12/31/2025 was $9,900,000 and decreased year over year by 65% or $1,600,000, primarily due to improved margin drop through. Interest costs decreased by 2% primarily on lower interest expense under the term loans. And net loss was $1,200,000, or $0.13 per share on a basic and fully diluted basis. Now moving on to our financial position. We continue to actively manage cash flow, as Alex had mentioned earlier. Net cash provided by operating and investing activities totaled $600,000 for the nine months ended 12/31/2025.
Net cash used in financing activities totaled $800,000, primarily to pay down principal under our revolving loan and term loans. Our total debt was $6,700,000 on 12/31/2025, compared to $7,400,000 on 03/31/2025. Cash balance as of December 2025 was $50,000 compared to $195,000 on 03/31/2025. Now let us take a little deeper dive into the segments. For Raynor, third quarter revenue for fiscal 2026 Q3 was up year over year by 1%. And overall strong margin growth was evident across all projects resulting in improved margin drop through which contributed $1,500,000 in gross profit for the quarter.
STADCO Q3, as you know, Alex had mentioned, revenue decreased by $300,000 compared to the same period last year, primarily due to delay in receiving customer-furnished materials, unfavorable project mix, and, you know, some equipment downtime. STADCO additionally experienced Q3 year-over-year gross margin decline as gross profit decreased by $600,000 due to lower revenue and higher provision for contract losses as the company continues to face headwinds in finishing out unfavorable legacy contracts, underpriced one-time contracts, and specific first article part numbers. As Alex noted, we continue to actively work with our customers on these contracts to our recovery and new pricing. With that, I will turn it back over to Alex.
Alexander Shen: Thank you, Phil. In closing, for those on the call who may not be very familiar with our company, TechPrecision Corporation is a custom manufacturer of precision, large-scale fabricated components and precision large-scale machined metal structural components. The components that we manufacture are customer-designed. We sell to customers in two main industry sectors, defense and precision industrial markets, predominantly defense. We do most of our work in industries that are highly sensitive to confidentiality, which preclude us from speaking publicly about many things that a company not operating in TechPrecision Corporation's specific environment might discuss. Please understand there are real limits as to what I can discuss, and sometimes those limits do change.
TechPrecision Corporation is proud and honored to serve the United States defense industry, specifically naval submarine manufacturing through our Raynor subsidiary, and military aircraft manufacturing through our STADCO subsidiary. We aim to secure and maintain enduring partnerships with our customers. As noted earlier, the total of completed funded grant money of more than $24,000,000 from our U.S. Navy submarine programs-related customers reflects this strong partnership. This commitment represents more than 50% of TechPrecision Corporation's market cap of $45.5 million. Overall, at both the Raynor and the STADCO subsidiaries, we continue to see meaningful opportunities in our defense sectors, as evidenced by the strength of our backlog.
And at Raynor, this is also further evidenced by the strength of our completely funded grant money. We are encouraged by the prospects of growing our revenue and increasing profitability in future quarters. We are showing progress. We have more work to do with our STADCO subsidiary to get it into the black. We are targeting to build and sustain a trend. Operator, please open the line for Q&A.
Operator: Certainly. Everyone at this time will be conducting a question and answer session. If you have any questions or comments, please press 1 on your phone at this time. We do ask that while posing your question, please pick up your handset if you are listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press 1 on your phone. Your first question is coming from Ross Taylor. Your line is live.
Ross Taylor: Thank you. Alex, can you guys address how much more in the way of bad contracts, first items, whatever we have left to work through, particularly at STADCO, to get to where we can see the benefits and fruits of these contracts, which appear to have some significant value but yet have yet to really generate much in the way, or quite honestly anything in the way, of earnings?
Alexander Shen: Well, let me parse that question and answer it in two chunks. So okay. We have the same concerns. How much more is left on these legacy contracts that are legacy, you know, repeating part number contracts or the legacy one-time underpriced contracts? How much more is left? That answer comes back in the form of working through, you know, both the operations, sales, as well as finance as one team to make sure that we capture all that in the expected contract losses. So Phil and I, with our people, collaborate to identify that to the best of our ability and forecast that to make sure that we understand how much loss is left.
So that is one piece of the answer. Right, Ross?
Ross Taylor: Well, no. I am trying to get an idea of, you know, we keep thinking we are getting through this. We keep thinking we are getting, you know, to the promised land, and yet we keep falling back into it. Reminds me a little bit like we got a NASCAR problem. We are just constantly turning left here, and left is into continued problems generating profits out of STADCO. I mean, you have owned STADCO for a long time. These contracts have been around for a long time. I am just trying to get a handle of do you have a couple million dollars left? Do you have $5,000,000 left?
You know, what is it, and when do we see breaking through, getting past the bad contracts to where we get to contracts that are going to allow us to make money, perhaps more reflective of the current operating environment, operating costs, and the like.
Alexander Shen: I do not think I am able to exactly quantify that. Because there is also a time element. Right? So when we are waiting for certain decisions to be made, and this is not entirely in our control. We need to work with the customers for that time element to come true as to when. I think the key is, whatever the number may be, we are attempting to capture the whole impact of these numbers. So we want to capture all the losses. So when we are taking a loss reserve on projected contract losses, that encapsulates up to the point of shipping and being done with these. Right, Phil?
Phillip E. Podgorski: Yeah. I agree. And, Ross, I will help with a little bit of the answer here to give you a little bit more clarity on some of the quarter and what we experienced in the quarter. So two of our contracts, our customers with items that are going back quite some time, we were looking to see if we could get the customer to agree to accept, and we had very strong indications as we are working with these customers over quite some time. And unfortunately, they surprised us with a, you know, no. You need to do some additional rework on these items, and these are legacy items.
So we had the hopes that we are putting it to bed, and we then had to rebuild into the estimated contract, again, fixed-price contract, the additional hours that we are estimating to rework that. Alright. So relative to those contracts, you know, we are hoping that the estimates that are built into the loss provisions that are built into the quarter will cover that. If we are, these parts are very, very specific and, from a tolerance perspective, require exact, precise measurements. So can I guarantee that they are completely behind us? No.
But I think we have reserved, right now, to the level that we feel comfortable with for these particular ones, whittling them down one at a time. And getting closer. I will just leave it at that. Hopefully, that helps answer your question.
Ross Taylor: Not really. What are we doing, yeah. I mean, it is just getting back to the idea of, you know, generally, the concept of the business is to make money doing what it does. Obviously, these are contracts that are bad contracts. You do not have the same, it does not appear you have the same relationship in STADCO that you have in Raynor with your customers, because they are not extending you any of these, any of the kind of, let us say, the professional courtesy of allowing you to make a profit, which is problematic.
What are you doing, I mean, there has got to be a growth plan here, beyond just kind of taking what is out there in the current kind of backlog and in the current part numbers and the like. What are you doing to drive revenue? We are stuck in the $7,000,000 to $9,000,000 a quarter range. It is not enough to break out profitability-wise.
It is pretty clear, I think, at least myself, I am confident to others who follow the company for a while, you really need to break that top line out and start to print numbers that are, you know, several million higher than you saw perhaps last quarter so we can start to actually produce some pretty meaningful free cash flow that would let you pay down debt, let you repair the balance sheet, all that stuff. What is the plan?
I cannot believe the board is kind of sitting there happy to see this, you know, kind of wallowing in the same $7,000,000 to $9,000,000 a quarter, lose $0.15, make $0.10, kind of, but usually, you know, lose or make a few pennies. Know, there has got to be some strategy you guys have to drive more through the facility. You know, I cannot believe that you are fully, you know, that if one walks through the plant floor that at any given time that, you know, we are seeing everyone working at full rate all the time. So what is being done to kind of find new business that honestly can be priced better?
Alexander Shen: We have found new business. And we are filling the backlog with new business that is priced better. This business has already started shipping on certain part numbers that are new to STADCO. That is one piece. The other piece is on our legacy customers. Our largest one, as everyone knows, is Sikorsky. Sikorsky is playing ball with us. And that is the plan. That is the biggest piece of the plan since Sikorsky is the biggest piece and the majority, over 50%, of our volume.
So the combination of working with our biggest legacy customers to be profitable, and new customers with new part numbers that we already have proven ourselves on first articles, and second articles, third articles, and ongoing, potentially decades-long programs of record, that is the plan forward. We cannot do more. We cannot do more.
Ross Taylor: Go ahead. When do we see the benefits of this? As I said, I mean, we have been stuck in this $7.09, $7.09 kind of range. When do you see us breaking out of that $7,000,000 to $9,000,000 a quarter revenue run-rate range?
Alexander Shen: That is a good question. I hesitate to answer because this quarter has been unexpectedly bad, and worse, much worse than our expectation. And we were surprised by, like Phil was saying, a couple customers that did not play ball. That was a surprise. I do not think we are going to have that similar type of surprise this next quarter ending March 31.
Ross Taylor: Okay. So we get, you know? But that could, you know, quite honestly, that could allow us to get back to the high end of the $7,000,000 to $9,000,000 range probably fairly easily given that, you know, I think you probably, I will not ask you how short you were, but my guess is that if you add back what you were short to kind of the middle of that range, you get to the high end. When can we see, when do you expect that we are going to kind of set, you know, move to a new low level? When can we get past so we get rid of this sevens and the like?
It seems like if we can get revenues $9,000,000, $10,000,000, $12,000,000, you can make pretty, pretty good money. In fact, you can make really good money. But when do we get to that level where, you know, our slow quarters are at the $9,000,000 range and our better quarters are double digits.
Alexander Shen: We are working on that. I am pretty sure whatever answer I try to give is not going to be great. I do not know. But I know that what I am looking to be informative.
Ross Taylor: Well, informative or not informative.
Alexander Shen: The goal is to first get us into nine-plus, and 10 would be good. When would I do that, and can I please have, you know, a trend established?
Ross Taylor: Uh-huh?
Alexander Shen: And that is really the question we are both wanting to get answers from me and Phil, and we are wanting to get these answers from ourselves as well. You know? To do the right things when nobody is looking or questioning. Yeah. Our results are not showing that yet. Nobody is happy. And I am ready to cook myself. But that does not stop me from doing the right things and moving things forward. Our plan is solid. Okay. We need to eliminate the risks that bite us. We will continue to do so. And we are working together with our customers that we want to be partnered with for the foreseeable future, decades.
Ross Taylor: Okay. I mean, I think it is very clear, you know, shareholders are owed kind of an imperative. If you take what the Navy has given you and you add back what STADCO has cost you, it is probably equal to the market cap of the company. So there is not a lot of value been added over the last few years. It would be nice to see you guys, you know, over this coming, these coming quarters this year, get back to where we can add some value and really push this thing on to the next level. I will let some others ask questions. Thanks. Thank you.
Operator: Thank you. Your next question is coming from John Brandberg. Your line is live.
John Brandberg: I am assuming that the product mix issue is isolated to STADCO, but I do not want to assume anything. So can you expand about the problems with product mix? And given the fact that you work with customer-designed products, how much of that is customer-controlled or customer-related, and how much of that is management-related?
Alexander Shen: Go ahead, Phil. You go first.
Phillip E. Podgorski: Yeah. So I thank you, John. So I think to answer your question directly, STADCO-related for sure. We are, again, reliant heavily on customer-furnished materials. And we did experience a lot of delay in the quarter receiving those. Know? And it does, unfortunately, affect the utilization in the facility. We moved, you know, certainly, individuals onto other contracts as we adjust. Some of those contracts are not as profitable as, as Alex had mentioned, some of the newer ones, particularly, you know, Sikorsky and whatnot. So we did experience a shift from more profitable to less profitable business and projects during the quarter. So that is, it is unfortunate. It was certainly customer-furnished materials that drove that.
And the resulting factor was a stronger, you know, sales and revenue related to those weaker performing contracts. I will add to that a little bit more and just say that we are in precision fabrication and custom and precision machining. So that means we do not have a mass production line. We make things by hand one at a time. So with each piece, you know, the situation is you make it one piece at a time. There are certain factors that go into it that may affect that one piece that could be mitigated at the second piece. It is not a mass production line. There are deviations between the two. They might be the same part number.
They might be the same operators, or they might not be. There are certain factors that change. But since it is not a production line, there are more factors for change than there are in a production factory that just makes one part number.
John Brandberg: Are you doing anything in your contracts? I mean, I find it kind of unusual to say that Sikorsky allows you, quote, to maybe, poorly paraphrasing it, but the gist of it is Sikorsky is kind of allowing you to make a profit. I just find that to be an unworkable, untenable, you should be able to make a bleeding profit. And now I understand that Sikorsky has been characterized as a better customer or a good customer or someone that is working with you more closely.
So that begs the question, the other 50% of revenue that is non-Sikorsky, I mean, you have to somehow, because of your, the concentration on high-precision manufacturing, if some customer does not work with you, it is not as if you can switch from A to B easily. I mean, you have to somehow either contractually or through customers, selecting customers, decide you have got to maybe eliminate some of these people and start focusing on people that, quote-unquote, allow you to make a profit.
I mean, it just seems, as you are trying to turn this company around, you have to be in an environment where either contractually you have more control or you make better decisions on the other 50% of your customers.
Alexander Shen: That is exactly right. We have to choose our customers and choose the ones that we can work with better to get better results for our shareholders. Exactly.
John Brandberg: I mean, you have something unique to offer. And I know. I understand the cost, quote-unquote, the customer is always right. Well, maybe not. I mean, I think you are offering a very limited skill to affect the total development of certain key defense products, end products. And not everyone can do what STADCO does. And so I am just underlining the fact that I would be very demanding on contracts to protect yourself. I mean, if your customer is not giving you product on time, they should be penalized. Or you should be given some type of fee adjustment. There should be mechanisms in your contract that protect you. Do you have those now?
Do you have any type of, well, I am using the term. I do not need to know the specifics. I just need to know, are there protection, I will use the term protection mechanisms that backstop you when these occasions occur because they are beyond your control.
Alexander Shen: It is going to be difficult for me to answer because so much of it is very particular and specific. The answer is not zero. We cannot survive with zero contractual protections. We agree, and those contracts, new contracts coming up, we cannot accept them if they are detrimental and harmful to STADCO or to Raynor. And we need to function both the same and not harm the companies because the customer wants it to be so. And you are correct. The customer is not always correct. The customer is not always right. There are certain protections in place, yes. Should we strengthen them going forward? Yes. And should we deselect some areas and not go into them?
Well, that depends on how much a chosen customer wants to play ball. If they do not, we do walk, and we have walked. And that is a choice that we need to make.
John Brandberg: I hear the talk from Mr. Taylor about revenue, and of course everyone wants to see you see a company get out of a so-called rut in terms of the $7,000,000 revenue thing. By virtue of what you do in both companies, STADCO, Raynor, which is high precision, one at a time, how do you address what, how do you get scalability? I mean, it is not like you can, you know, put more tomatoes in the pot and feed more people. I mean, I do not see the scalability issue because obviously you want to get the top line up.
But because of the virtue of what you do, and the cost both in terms of talent and machining, what is your operating capacity? Are you at 50%, 70%? Do you have room for that top line to be there if the customers are there? So I just, I just have a problem with trying to see how you scale things with, intrinsically, what degree of your whole process is so specialized.
Alexander Shen: So there is a process that is specialized, and it is specialized for each part number. Right? Right. So then the key is going to be, for that part number that we specialize in, to keep repeating. So we make this part number again and again, and to have a number of these, you know, repeating part numbers and to really eliminate the one-times, because that is the thing that takes a lot of time, is the first time or the first article. If there are no follow-on articles, that is the kind of business that we need to really get away from. Right. So we can have some kind of scalability.
So that when we do repeat a part, we have already learned the process. And now it is going to be the next tranche of the same part number. We are refining the process that we already established first-article protocols on. And that we passed first-article inspections by the customer on. And then now we are into follow-on orders and, you know, into programs of record that are going to exist for not just years, but perhaps decades. You know, there are some programs that we are leading ourselves into and cross-utilizing the members between STADCO and Raynor to gain a foothold to let STADCO also gain a foothold through that cross-pollination between the two companies.
So eliminating one-time projects and going towards repeating part numbers that have longer legs, that is one very big key strategy. It is not a big secret, but it takes a while. We need partnerships with customers that have the long legs on programs of record. So that is the ones that we are choosing carefully. And that is the ones that also are willing to choose us, both at Raynor and at STADCO. That is what makes sense to us. We are so small. We can only do what we can do. Do the best we can at it and add more to it and scale up. And, you know, the scale-up is not going to be 10x.
The scale-up is going to be a gradual scale-up. But, as we all wish to achieve, we want this, you know, the lowest water level to rise beyond what we have today. I am not very happy at all with our performance today.
John Brandberg: Thank you for your answer.
Alexander Shen: Yes, sir. Thank you very much for the questions.
Operator: Thank you. That concludes our Q&A session. I will now hand the conference back to Alexander Shen for closing remarks. Please go ahead.
Alexander Shen: Thank you, everyone. Have a great day.
