Greetings, and welcome to the TechPrecision Corporation Fiscal Year 2026 Second Quarter Financial Results Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Brett Maas with Hayden IR. Sir, the floor is yours.

Thank you. On the call today is Alex Shen, Chief Executive Officer; and Phil Podgorski, Chief Financial Officer. 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 represents management's estimates as of today, November 13, 2025. 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, please continue.

Thank you, Brett. Good afternoon to everyone, and thank you for joining us. Please excuse my raspy voice, a little bit of cold here. Fiscal 2026 second quarter consolidated revenue was $9.1 million or 2% higher when compared to $8.9 million in the fiscal year 2025 second quarter. Consolidated gross profit totaled $2.5 million or $1.4 million higher when compared to the second quarter of fiscal year 2025. At both Ranor and Stadco segments, favorable customer mix has resulted in improved margins. Fiscal year 2026 second quarter Ranor revenue was $4.4 million, with operating profit of $1.6 million. Second quarter Stadco revenue was $4.8 million, with operating loss of $0.5 million compared to the same period a year ago. Stadco had an $873,000 improvement in operating income. For second quarter, operating income was $0.9 million, and favorable customer mix enabled 3 drivers. One, better throughput at Stadco, resulting in higher revenue; two, lower provision for losses from specific first article costs; and three, lower provision for losses from onetime one-off contracts. 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. At our Ranor segment, sustained delivery and installation of new equipment continues as we specifically execute the $21 million plus of completely funded grant money from our U.S. Navy-related customers. Customer confidence remains high at both Stadco and Ranor. 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 Ranor 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 already strong $48 million backlog. We expect to deliver this $48 million backlog over the course of the next 1 to 3 fiscal years with gross margin expansion. Now I'd like to turn the call over to our Chief Financial Officer, Phil Podgorski, to continue with the review of our second quarter and 6 months ended fiscal year 2026 results. Phil?

Thank you, Alex. As Alex just mentioned, for our fiscal 2026 second quarter, consolidated revenue increased by 2% to $9.1 million compared to $8.9 million in the same period a year ago as we continue to focus on building our strong recurring revenue customer base. Consolidated cost of revenue decreased by 16% or $1.3 million as throughput and customer mix improved at both segments. Consolidated gross profit increased by $1.4 million in Q2 fiscal 2026 to $2.5 million, resulting in double-digit year-over-year consolidated gross margin improvement of 16 percentage points. Consolidated SG&A increased slightly by 1% to $1.5 million in the fiscal 2026 second quarter due to increased office -- general office expenses, but partially offset by a decrease in outside advisory and consulting costs. Fiscal 2026 second quarter interest was higher due primarily to interest rates -- our interest cost rates related to higher borrowing under the revolving loan. Net income was $0.8 million for the quarter, with $0.08 per share on a basic and fully diluted basis. For the 6 months ended September 30, 2025, consolidated revenue was $16.5 million or 3% lower when compared to the same period a year ago. Consolidated cost of revenue was $13 million or $2.7 million lower than the same period a year ago, again due to favorable customer mix and productivity gains at both Ranor and Stadco. As noted, favorable customer mix and productivity gains increased gross profit by $2.2 million or 14 percentage points year-over-year. SG&A decreased by 2% as lower outside advisory and consulting costs more than offset the increase in general office costs. As a result, operating income increased by 126% to $0.5 million. Interest costs increased by 3%, again on higher borrowings under our revolver loan, resulting in net income of $0.2 million or $0.02 per share…

For those on the call who may not be very familiar with our company, TechPrecision is a custom manufacturer of precision large-scale fabricated components and precision large-scale machined metal components. The components that we manufacture are customer-designed. We sell to customers in 2 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's specific environment might discuss. Please understand there are real limits as to what I can discuss, and sometimes, those limits do change. TechPrecision is proud and honored to serve the United States defense industry, specifically, naval submarine manufacturing through both our Ranor and Stadco subsidiaries and military aircraft manufacturing through our Stadco subsidiary. We aim to secure and maintain enduring partnerships with our customers. Overall, at both the Ranor and the Stadco subsidiaries, we continue to see meaningful opportunities in our defense sector, as evidenced by the strength -- by the continued strength of our backlog. We are encouraged by the prospects for growing our revenue and increasing profitability in future quarters. In summary, we had a profitable consolidated quarter. We are showing progress and have more work to do with our Stadco subsidiary to get it into the black. We filed on time, and we are targeting to build and sustain this trend. We want to build this trend. Operator, please open the line for Q&A.

[Operator Instructions] We have a question from Ross Taylor with ARS Investments.

First, I didn't think I'd ever live to see the day you guys actually reported inside the time horizon. So congratulations, really fantastic turnaround on that. What percentage of your Stadco business is still needing to be reworked to become profitable or needs to -- is one-off contracts that you need to run out to become profitable overall?

I don't know about the percentage, but I think the -- let me parse that question and split it into three chunks. As far as the one-offs, I think those will need to continue. As far as the -- well, I say they continue. They will need to continue, but the ones that are experiencing losses and loss reserves have been dealt with very vigorously in the last quarter that we're reporting on. So that's really good. As far as another piece of it that was causing loss reserves was basically our first article activity. That doesn't mean just the first unit. It means the whole first article activity for our repeating part numbers. So it might be the first one, the second and third one, or it might be the first 10. It depends on the situation. But first article activity, until we can get to a stable, repeatable, sustainable cadence and expectation of manufacturing throughput, those have also been rather vigorously dealt with in the quarter we are reporting on. How much is left? Well, it will be imperative to continue to capture new business with new part numbers. So the first article activity needs to be watched carefully. The risks need to be mitigated. The customer collaboration, we will increase that to the point where we deal with the first article loss reserves. We want to deal with them more effectively. I don't know that we can deal with them as effectively as we did in the reporting quarter that we're reporting on now. But certainly, we've set ourselves a target. We're not going to keep missing these targets. We're going to work towards the target, hit the target. And I'm here to build a trend together with Phil Podgorski.

Okay. So you said there are three aspects. So you have the one-offs, and you basically -- those are either run through or you -- future one-off contracts, we should expect to be able to be profitable. You've got the first articles, which obviously -- first articles always tend to carry -- they have issues or risks with them, so they tend to carry lower margins that you believe. Is the problem there more -- did you see it more as a -- was it a design issue? Was it the customer changing the designs? Was it underbidding? What did you sense the issue was in those first articles?

So as I pulled out my playbook of analyses and tried to get these things down to what's the one big thing, it turns out that because we are really concentrating on rather complex, highly complex items and critical items that are critical to the war fighters, it's really dependent on the situation, Ross. I'm not trying to be funny about this. I'm just trying to tell you the truth. The -- it's a case-by-case basis on each part that we're attempting to build. So it's not one thing. It's a number of one things. So when you've got a lot of people touching it and when you have a lot of different people on the customer side also touching it, the number of touches increases the chances of something not going quite right on the handoff back and forth. That certainly happens quite a lot more when it's first article time. Neither side have been working with each other on this particular part number before. So even if we build a second one, it's not going to repeat the same way that we did the first one. It's much more complicated than to try to generalize and tell you that I've identified the main culprit or the first -- top three culprits. They tend to take turns. We need a little bit more experience with these things to understand how to deal with them in aggregate. But the execution and detail, the nuts and bolts are really important for us to grasp each detail. And it helps me quite a bit when I'm on-site and dealing with these things in person, as well as through my subordinates.

Is this an issue both at Ranor and Stadco? Or is it more concentrated at Stadco?

I think the first article problems -- so characterizing Ranor being mostly NAVSEA, Electric Boat, Newport News, Virginia class submarine and Columbia class submarine specification-driven. So the overall and overreaching specification sets our Virginia class and Columbia class. At Stadco, it's a little bit more than one set of specifications or two sets of specifications. So the idea is to focus ourselves and make sure we go back to the same customers because we've already proven ourselves at both Ranor and Stadco to these same customers. That we know their specifications, we know how to manufacture and really sustain our on-time delivery, delivering quality parts to their specifications. So as we continue that focus, that's going to lead us towards full recovery in the black at Stadco consistently. Am I making sense?

Yes, you are. Having spent some time in the defense industry, some of this stuff actually is things I remember and I'm familiar with. If the Korean -- South Koreans turn the Philadelphia Shipyard into a submarine manufacturing facility initially for their boats, which are somewhat different than our boats, but there would be a probably likely overlap in many systems and components, is that an opportunity for you? And is it something that you would have the ability to service out of your current industrial base?

I'd love to be able to answer that question, and it falls into the area where I can't speak. Can you rephrase or something?

Do you see the -- at the shifting of the Philadelphia -- former Philadelphia Naval Shipyard to a submarine manufacturer to be an economic opportunity for you?

We will look at every single opportunity, yes.

And I would assume that there are things that go into submarines, generally Western submarines that you produce that in this country would -- you would produce in -- since what, 90% or so of your business is, effectively, you are the sole source. I would assume that a lot of that stuff would still end up in allies' boats as well as U.S. boats?

You've got great assumptions, Ross. I don't mean that in a funny way. I am aligned with your assumption and that way of thinking.

We went out of the helicopter this time. Can you walk through -- Phil, can you walk through the -- how you guys handle the grants that you've gotten from the federal government and the characteristics of those grants and what restrictions, if any, exists with them?

Maybe we can answer this jointly. So the restrictions as far as what parts we may use the equipment for, the Navy parts that they're meant for have priority. And if there are none, then we do have the ability to use these assets for non-Navy parts that weren't designated.

Or other Navy parts?

Or anybody's parts.

Anyone's part. And how does it sit on the balance sheet?

That's a Phil question.

So certainly, when we receive the cash, we certainly have an obligation to protect that, so we do segregate. We do have liabilities also that are established upon receipt of that cash, whether it's to the supplier or to a vendor that we're working with to secure that equipment. Likewise, as we onboard those assets onto our balance sheet, we do have -- depending on what the agreement is with our customer -- I mean, our supplier, we then, at that stage, will create a offsetting liability and depreciate over the useful life of that equipment. So we have assets and liabilities set up to handle each unique agreement that we have.

Okay. And are any of the liabilities basically future performance or future services delivered that they give you this money and you are required to provide them something or you get paid for everything you build with this new equipment?

We have paid for everything that we build, right, with this equipment. And there is a -- I can tell you on one contract, for example -- sorry, one funding -- that we do have a 10-year agreement with that, whereby we need to continue to perform for that period of time.

Okay. And one last one for me is you've talked about the ability to garner new business. You're in an industry where a number of suppliers have struggled to either meet quality or timing and things of this nature. Have you -- what kind of new business have you seen? Are you seeing -- are you thinking things on -- by part number? Outside of TPCS, a lot of us think of it as programs. Are you getting involved in any new programs, particularly out of the Ranor operation?

We are in the giant program mix of Virginia class and Columbia class submarines. There are programs within those two classes of submarines that we are on.

Is there an opportunity for you in the larger undersea unmanned vehicles?

Those are different sets of specifications.

So at this point, no, but if they were to develop things such as -- there's talk that they want to build something that sits on the bottom of the Taiwan Strait, then when the Chinese decided to invade that, they automatically launch missiles. I think of you guys as being involved in that aspect of U.S. submarines. Would that be an opportunity for you guys if we were to go that direction?

I think at this point, we are -- we have a lot of opportunity with the same customers and the same design shipyard. So if our customers lead us to that type of opportunity, we're absolutely ready to take a look. We just need to make sure that whatever first article activity we choose, it's going to be something that we can mitigate the risk and stay resilient with good backup plans and good planning for advanced countermeasures to counteract the learning that we tend to do as a community on new first article parts and new first article programs.

It was -- it just strikes me as it would seem that with things like longitude doors and things that there might be a technological capability overlap that as we develop more war fighting unmanned underwater vessels that your skill set would become more in demand. I'll pass it to others. I've taken up a fair amount of people's time. And congratulations for getting back on time. One thing I would love to see that I'm going to leave you with, insiders actually buying stock instead of selling stock would be a nice change of pace.

Duly noted.

Ladies and gentlemen, we have no further questions in the queue at this time, so this will conclude our question-and-answer session. I would now like to turn the call back over to management for any closing remarks they may have.

Thank you, everyone. Have a great day.

Ladies and gentlemen, this does conclude today's call. You may disconnect your lines at this time, and we thank you for your participation.