Executive Summary
TechPrecision reported QQ1 2026 consolidated revenue of $7.38 million, down 8% year-over-year from $8.00 million in the year-ago period, while gross profit rose to $1.03 million, lifting gross margin to roughly 13.96%. The two-segment result showed a notable divergence: Ranor generated $4.30 million in revenue with a positive operating profit of $1.50 million, while Stadco delivered $3.30 million in revenue but incurred an operating loss of $1.20 million. Stadco’s YoY gross margin improved by 14 percentage points, driven by pricing actions and productivity gains, but a legacy-contract burden and first-article costs kept Stadco in the red for the quarter. Management framed the results within a broader defense-led growth narrative, underscored by a $50.1 million backlog as of June 30, 2025, and ongoing efforts to renegotiate unprofitable legacy contracts (roughly 30-40% of affected revenue acknowledged by management). The company emphasizes disciplined cash and working capital management, with operating cash flow of $0.646 million and a free cash flow of −$0.604 million for the quarter; however, negative working capital remains a near-term constraint due to covenant-related debt classification. Looking forward, TechPrecision targets backlog-driven revenue visibility and gross-margin expansion over the next 1–3 fiscal years, supported by grant-funded Navy programs, potential new defense opportunities in air defense and submarine segments, and a ramp in capacity (including a contemplated second shift) to accelerate top-line growth if pricing and program execution hurdles are resolved.”,
Key Performance Indicators
QoQ: -3.19% | YoY:-14.20%
Key Insights
Revenue: $7.379 million (Q1 2026) vs $8.000 million (Q1 2025) — YoY -8%; Gross profit: $1.030 million; Gross margin: 13.96%; Operating income: $(0.463) million; EBITDA: $(0.463) million; Net income: $(0.597) million; EPS: $(0.06) Basic/Diluted; SG&A: $(1.493) million; Interest expense: $(0.135) million; Cash from operations: $0.646 million; Free cash flow: $(0.604) million; Cash at period end: $0.143 million; Total debt: $9.933 million; Net debt: $9.790 million; Backlog: $50.1 million (Jun...
Financial Highlights
Revenue: $7.379 million (Q1 2026) vs $8.000 million (Q1 2025) — YoY -8%; Gross profit: $1.030 million; Gross margin: 13.96%; Operating income: $(0.463) million; EBITDA: $(0.463) million; Net income: $(0.597) million; EPS: $(0.06) Basic/Diluted; SG&A: $(1.493) million; Interest expense: $(0.135) million; Cash from operations: $0.646 million; Free cash flow: $(0.604) million; Cash at period end: $0.143 million; Total debt: $9.933 million; Net debt: $9.790 million; Backlog: $50.1 million (June 30, 2025).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
7.38M |
-14.20% |
-3.19% |
| Gross Profit |
1.03M |
-16.15% |
3.94% |
| Operating Income |
-463.00K |
81.17% |
33.48% |
| Net Income |
-597.00K |
88.34% |
25.28% |
| EPS |
-0.06 |
89.66% |
25.00% |
Management Commentary
Key management insights from the QQ1 2026 earnings call and Q&A:
- Backlog and visibility: Alex Shen stated, “We reached a new milestone, building our backlog to $50.1 million on June 30, 2025,” underscoring the defense-oriented demand engine feeding Ranor and Stadco. Shen also framed backlog delivery as a multi-year pathway: “We expect to deliver our backlog over the course of the next 1 to 3 fiscal years with gross margin expansion.”
- Margin trajectory and productivity: CFO Phil Podgorski highlighted throughput-driven margin gains across segments: “consolidated cost of revenue decreased by 18%… gross profit increased by $0.8 million… resulting in a double-digit year-over-year consolidated gross margin improvement.”
- Contract renegotiations and pricing discipline: The team discussed ongoing renegotiations with legacy contracts, noting that “approximately 35% to 40%” of problematic contracts have been resolved to date, with ongoing efforts to push pricing higher and curtail losses on onetime contracts.
- Stadco’s turnaround focus: Shen acknowledged Stadco’s major margin improvement but cautioned that legacy contracts remain a drag; Podgorski emphasized a disciplined approach to renegotiate and to avoid unprofitable work, including the potential “walk away” from some contracts if needed.
- Operational cadence and capacity expansion: The executives signaled a broader strategy to institutionalize routines on cost of revenue, throughput, and productivity. Shen commented on the need to “establish this thing into a line, a trend” and to move toward a higher top-line with scalable operating routines.
- Strategic growth and shifts in capacity: The call referenced pursuing new opportunities in air defense and submarine defense, and the potential for a second shift to increase capacity and cash flow, with the CFO noting capital investments and the need to secure customer furnished materials (CFM) deadlines.
- Investor sentiment and governance: The CFO’s participation was cited as a sign of governance improvement and discipline, a theme echoed by investors pressing for top-line growth and a path to profitability. Quote excerpts attributed to: Alexander Shen (CEO), Phillip E. Podgorski (CFO).
“We reached a new milestone, building our backlog to $50.1 million on June 30, 2025.”
— Alexander Shen
“We expect to deliver our backlog over the course of the next 1 to 3 fiscal years with gross margin expansion.”
— Alexander Shen
Forward Guidance
Management’s qualitative guidance centers on backlog-driven visibility and margin expansion rather than numeric earnings targets. Key elements:
- Backlog expansion and margins: “We expect to deliver our backlog over the course of the next 1 to 3 fiscal years with gross margin expansion.” This implies a gradual upscaling in profitability contingent on improving pricing on legacy contracts and sustaining productivity gains.
- Program execution and diversification: The company continues to pursue air defense and submarine defense programs with the same core customers, and notes that the backlog is all related to those defense programs, providing future revenue visibility if production ramps proceed.
- Capacity and shift optimization: The discussion of a potential second shift and investment in equipment funded by customers, along with improved operating routines, suggests the company is planning to lift capacity utilization to support higher volumes.
- Risks to outlook: The dialogue emphasized the lumpiness of defense programs, the dependence on sole-source contracts, and legacy contract headwinds. The call also highlighted covenant-related liquidity constraints and the need for continued discipline in pricing, cost control, and working capital.
- Our assessment: The near-term profit profile remains negative on a GAAP basis as the Stadco legacy issues and lumpy revenues weigh on margins. A constructive path to profitability will likely hinge on (1) completing additional renegotiations at favorable pricing, (2) accelerating new program wins and line-fill opportunities, and (3) realizing scale via a second shift and better cost-of-revenue discipline. Investors should monitor progress on contract renegotiations (targeted tranche completions), backlog evolution, discipline in working capital, and any announced capital-light capacity expansion agreements with customers.