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TechPrecision Corporation (TPCS-OTCBB) |
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February 17, 2012 Issue |
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The Most Powerful Name In Corporate News and Information |
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CURRENT ISSUE | COVER ARCHIVES | INDEX | CONTACT | FINANCIALS | SERVICES | HOME PAGE |
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Serving the Large Scale Precision Machine Fabrication Assembly Needs of their Tier-1 Customers, TechPrecision Corp. is on Track for Double-Digit Growth Year-Over-Year |
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Founded in February 2006, TechPrecision Corporation is a holding company that is driven to provide businesses with the most well-engineered, cost-effective turnkey solutions to their large-scale component and equipment manufacturing challenges. By assembling experienced engineering, metal machining and fabrication companies that specialize in unique, demanding global industries, TechPrecision provides clients with access to knowledge, resources, and technologies that span some of the most demanding manufacturing sectors.
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Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – February 17, 2012
Mr. Molinaro:
The grand plan is this is a company that produces some amazing large scale
precision machine and fabrication assemblies on a global basis. For years
they have has not seen its potential of what it is capable of growing to
with its Tier-1 customers, now this vision is clear. The company only serves
Tier-1s in the world from Westinghouse, BAE, General Dynamics and GT to
General Electric. The grand plan is to continue to partner with these Tier-1
customers and continue to grow the company at a sizeable level. The company
was typically floundering in the mid to high $20 million level and we are on
track for double-digit growth every year until I achieve my plan and get
this Company to a $100 million level in the shortest time possible. We have
every opportunity to get there. CEOCFO: What about the applications and what is unique or special about what TechPrecision is offering? Mr. Molinaro: When you have an idea, concept or a design for a product or technology, traditionally large scale, which means half the size of a house, we are the guys you call to figure out how to produce this on a scalable level with quality inserts that are second to none. My best example of what we do and how we do it is we produce the assembly for Mevion, which is the latest proton beam cancer treatment equipment. What happened is this customer and a group of scientists from MIT walked in our door and said we are going to revolutionize cancer treatment and there is going to be no more radiation sickness. We are going to cut the cost of this equipment from $150 million to $20 million and we would like you guys to figure it out. We said, “sure”, and we did. Several years later the first production unit has been shipped to Siteman Cancer Treatment Center. This was a technology that was costing a hospital $150 million and needed a building the size of a football stadium. It is now a $20 million piece of equipment that sits in a relatively small room. So my question to customers and shareholders is what is that worth to you? We are the guys that can figure that stuff out. Our customer should get 510k approval by June and it will literally revolutionize the way people will be treated for tumors or other cancer growths, without any side-effects of traditional radiation treatment. That is the type of stuff that we do. That also encompasses the world of nuclear, the world of defense and the world of alternative energy. We build the assemblies used in Virgina Class nuclear submarines, and those used in the Westinghouse nuclear reactor. We also built the assemblies that go into the latest solar panel PolySi production and large chamber assemblies that go into sapphire production for LED lighting. Again, we are the guys you come to and say, “I have this big thing that weighs 50 tons. We know how to design it, but we do not know to build it.” That is what we do.
Mr. Molinaro: We are not the inventors of the core technology. We are the guys that figure out how to build the core technology and make it do what it is supposed to do. Therefore, it is really the manufacturing engineering and manufacturing process that is our forte.
Mr. Molinaro: We have very few competitors at our scale. Since 1980, we are one of only six N-stamped machining/fabrication companies that are left in the United States. We have operations in China, but speaking of United States landscape we are only six left in the country. Eighty percent of our competitors since 1980, in the N-stamped arena have gone out of business or their jobs have been moved overseas. There are very few of us left in the country that makes anything of the complexity and scale. This country has lost its ability to manufacture these large-scale products. We are one of the few companies continuing to grow in that realm in that we still make great things and employ really great people to make these great things.
Mr. Molinaro:
We also have operations in China; we are a global supplier. Most of our
customers are also global players. What they like about working with us is
when they have projects that are for the US or European market, we can
produce those at US factories. If they have projects that are in China or
South Korea, Singapore, India, we can produce things for Asia with our China
operation, so we are a global player. They like that we have US settlement
to support the US market, but shipping 50-ton units from the US to China is
not advantageous logistically. When they have projects and customers for US
and European markets, of course they like the fact that we can build it
here. There is also an element and trade secret and IP, but they also like
the fact that we can protect very sophisticated items like the cancer
treatment equipment or some very specialty defense work and stays in the
United States.
Mr. Molinaro:
It is a matter of growing in the industries. We want to continue to expand
particularly in the nuclear sector. It is ironic that the NRC has now
approved what is called an AP Reactor (Advanced Passer reactor), and pretty
much eliminated any of the issues that you have seen or were associated with
in Fukashima. It was tragic, but there are technologies that are better, so
the AP Reactor was just approved by the NRC. The United States is building
the first two of six units in the US, but 70% of the content that goes into
those reactors is being purchased from abroad, which is pretty disgusting.
Here is the other issue. Each nuclear reactor is around $16 billion and the
US government is providing loan guarantees for that $16 billion. However, of
the $16 billion of US loan guarantees, 70% of the content is being produced
outside of the US and not benefiting anyone in the US. It is kind of
bizarre. It should not be that way, because that very same reactor is being
built in China. China is providing the money guarantees for those reactors
in China. The Chinese government has passed legislation, which requires that
85% content for those reactors must be made in mainland China. It is the
very same product, the very same technology, the very same guarantees, but
one government has no restrictions on content and the other one has an 85%
restriction. Therefore, I am working very hard to get people to stand up,
listen and know that TechPrecision is a company that can bring some of that
70% non-US content back to the United States for our Company and others to
produce.
Mr. Molinaro:
Because we have plenty of Tier-1 customers that we are just growing into, we
are going to be we plan to open another US manufacturing facility and we are
going to do that organically rather than through acquisitions. We keep our
eyes open for acquisitions. But to get from $25 million up to $100 million
over the next few years will be a 100% organic, we have all the Tier-1
customers in-place today and they want to buy more from us. We just have to
grow with them and partner with them and execute. So, acquisitions are
unlikely, but another US factory, most definitely. When it is done we will
have two very large US factories and we have two very large operations in
China. Mr. Molinaro: The good news is we have very little debt. We have cash on the books and the outlook looks like it is going to continue to be cash accretive, so we are pretty happy with the growth projection of our company financially.
Mr. Molinaro: Yes. We are a public company and we very much want to graduate to Nasdaq as soon as we can. We are already covered by three analysts and not many Over the Counter companies are covered by analysts. Some are being very aggressive with our growth curve. I keep joking with several of them that I probably need growth in the third factory just to keep up with their forecast. However, this is an exciting company with exciting ability and we will maintain the double-digit growth for the foreseeable future.
Mr. Molinaro: Yes we are currently staffed properly. The new factory like any new factory will pose some challenges to get it up and operating, but the unemployment rate is such in the US that I believe we can find the right talent and continue to grow and hire.
Mr. Molinaro: Yes, we do quite a bit of time on the road meeting with investors or attending specific conferences. Our IR firm does an excellent job of keeping us in front of investor markets, whether it is a private road show or conference. There are three analysts covering us. The analysts also like to set up road shows for us to stay out in front of the public and it takes up a good part of my time. I love to be in front of the shareholders, but I much prefer to be in front of our customers, continue the growth path and produce the numbers that investors are excited to talk about. Therefore, I spend about 30% of my time on the investor front and 70% of my time on the customers and our operations.
Mr. Molinaro: We opened up the operations in China and achieved cash flow profitability in less than six months.
Mr. Molinaro:
There are very few companies like TechPrecision in the public market. There
are very few companies like TechPrecision who have the ability and customer
base to continue to grow at a double-digit rate regardless of the economy on
a global basis. It is one of those diamonds in the rough companies. I have
been onboard for the last twenty months and if you like what I have done for
the last twenty months, wait until you see what is going to happen in the
next twenty months. Just a great opportunity, this is a very undervalued
company today. |
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The grand plan is this is a company that produces some amazing large scale precision machine and fabrication assemblies on a global basis. For years they have has not seen its potential of what it is capable of growing to with its Tier-1 customers, now this vision is clear. The company only serves Tier-1s in the world from Westinghouse, BAE, General Dynamics and GT to General Electric. The grand plan is to continue to partner with these Tier-1 customers and continue to grow the company at a sizeable level. The company was typically floundering in the mid to high $20 million level and we are on track for double-digit growth every year until I achieve my plan and get this Company to a $100 million level in the shortest time possible. We have every opportunity to get there. - James S. Molinaro |
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