TechPrecision Corp (TPCS) 2009 Q3 法說會逐字稿

Good day and welcome to the TechPrecision third quarter fiscal 2009 conference call. Today's conference is being recorded.

At this time I'll would like to turn the conference over to Mr. Crocker Coulson. Please go ahead, sir.

Thank you. Good morning, ladies and gentlemen and welcome to TechPrecision's third quarter of fiscal 2009 earnings conference call. With us today on the call are TechPrecision Corporation's Chairman and CEO, Mr. James Reindl; and the Company's Chief Financial Officer, Ms. Mary Desmond. Before I turn the call over to Mr. Reindl, I would like to remind our listeners that in this call, management's prepared remarks do contain forward-looking statements which are subject to risks and uncertainties. And management may make some additional forward-looking statements in response to your questions. Therefore, the Company claims the protection of the Safe Harbor for forward-looking statements that's contained in the Private Securities Litigation Reform Act of 1995.

Actual results may differ from those discussed today and therefore I would like to refer you to a more detailed discussion of these risks and uncertainties that is contained in the Company's filings and future filings with the US SEC. In addition, any projections as to the Company's future performance represent management's estimates as of today, February 12, 2009. TechPrecision assumes no obligation to update these projections in the future, as market conditions change. With those formalities out of the way, it's now my pleasure to turn this call over to TechPrecision's CEO, Mr. Jim Reindl. Jim?

Thank you, Crocker. Welcome, everyone, and thank you for joining us today for TechPrecision's third quarter of our fiscal 2009 earnings call. As you know, in the fourth quarter of calendar '08, our third quarter of fiscal '09, economic conditions experienced rapid deterioration worldwide. Unfortunately, like many others, we were not able to move forward unscathed. However, in light of the difficult conditions, we were pleased with our quarterly results. Mary will discuss our financial results in more detail later, but let me give you a brief summary now. Revenues in our third quarter decreased 11% to $8.6 million compared to our same quarter last year. Gross profits rose 1.6% to $2.6 million, representing a gross margin of 30.7%, up from 26.8 last year. Our EBITDA rose to $2.5 million, up from $2.4 million last year. But due to higher marginal tax rates, our net income decreased 26.4% to $1 million compared to $1.4 million in the prior year. Net income per share was $0.07 and $0.04 basic and diluted versus $0.12 and $0.05 for the third quarter of the previous year. This quarter's results which reflected the economic downturn and tight conditions in the economic market reemphasized the importance of the diversified platform and our focus on winning long-term production programs in high growth markets. We would like to assure you that we have been moving aggressively towards that goal.

First, let me address the current economic environment and what effect we think it will have on our business. We mentioned in our last conference call that we encountered a slowdown of customer delivery schedules, particularly in our solar business. Subsequently, starting in December of '08 our solar customer had significantly reduced its monthly delivery requirements. We also experienced a slowdown in delivery schedules for orders placed by our other customers. Due to these developments we anticipate an impact to the remainder of our fiscal year and could see effects through early 2010 fiscal year. We have been and are likely to continue to be affected by recessionary pressures which have affected companies that manufacture global goods.

On a brighter note, it is no accident we are one of the few remaining end-to-end solution providers in the United States. In the elite precision manufacturing business. With more than 50 years of experience serving our blue chip customer base we survived many a business cycle and through prudent management we believe we will thrive coming out of this one. Although the downturn brings much uncertainty and unlike many other generations have experienced, there are reasons to be optimistic. For one, we should note that as of this date, none of our backlog has been cancelled. Rather, the orders have been pushed out. It seems that time is at a standstill and businesses are waiting for the credit markets to unfreeze.

Contrary to what one might believe, we continue to receive a relatively high level of requests for quotations, particularly in our alternative energy, medical and nuclear businesses. Unlike previous uncertain business cycles when there weren't even projects to quote. Therefore, despite near term uncertainty, we still remain optimistic and expect to perform at high levels over the next several years.

With that said, I would like to provide you with an update on our progress on our key alternative energy, medical and nuclear businesses. During the third quarter, our solar business continued to be the main driver of our revenues and profits. We continued to enjoy a strong relationship as a key supplier to our important solar customer. A capital equipment supplier to some of the world's top solar manufacturers. Based on our research it appears that customers throughout the supply chain are deferring capital equipment purchases. However, end customers continue to invest in facility expansions which suggests a ramp-up of capital spending is only a matter of time. In the interim, we've been aggressively pursuing opportunities to diversify our business platform.

Within alternative energy, we're exploring potential new production programs for wind turbine and geothermal industries based on requests for quotations that we've received. These programs match our skill set perfectly. They require the ability to manufacture large scale, high precision components, which satisfy our interest in producing multiple units per month to achieve scale and would be long-term in nature.

In the last few years, due to record high energy prices, the world has sought renewable energy solutions. We believe that based on our solid execution and track record of on-time delivery, we can capitalize on other segments of the alternative energy market as well, and we are aggressively seeking to secure such work statements.

Another area where we maintain a strong competitive advantage is the growing nuclear industry. Our nuclear business represented less than 1% of revenues of our third fiscal quarter and we still believe that major ramp-up within the industry is at least a year or more out. However, we should be one of the prime beneficiaries of the coming nuclear renaissance.

Firstly, we're one of the only handful of companies which have certifications to manufacture nuclear equipment. We recently renewed our ASME or our American Society of Mechanical Engineers certificate. We also maintain a long-standing relationship with all the world's top suppliers to the nuclear industry, including Transnuclear and other divisions of Areva, NAC, Westinghouse and Curtis Wright.

Contracts are currently being awarded by the OEMs for long lead items such as large forgings required for internal components. During the third quarter, our wholly owned subsidiary, Ranor Inc. was awarded a contract from of Areva MP Inc. of Lynchburg, Virginia. Pursuant to this contract we were commissioned to supply the upper lateral support for replacement steam generators for utilities in the United States. We were pleased to receive this award from Areva. They're a world leader in the design and construction of nuclear power plants worldwide.

Additionally, as mentioned during our last conference call, we have also received new orders from Westinghouse Nuclear. These Westinghouse orders include both new build components for the AP 1000, along with components required for existing plant refurbishments. We continue to aggressively seek new nuclear industry work statements as well.

Our medical business continued to ramp up in the third quarter, accounting for approximately 23.1% of our sales, up from 8.5% in the second quarter and grew substantially on an absolute basis as well. Our current backlog with our medical customer is more than $2.7 million. We have been working with our customer for several years now, helping them to build a next generation of proton beam therapy accelerator. A high tech machine to treat cancer. However, we are particularly excited about this product as it uses state-of-the-art technology to substantially reduce the footprint from the current platform, the size of a football stadium and price point down from approximately $200 million, which would include the requisite infrastructure to house all the associated medical equipment, down to $20 million for this version of the equipment. Their work is nearing completion as we are assisting them in completing the task in a timely manner.

We are working diligently to provide them with a fully integrated turn key solution. Our customer already has a significant number of firm orders for their machine. Once operational, we could see substantial orders from our Company for them producing another reoccurring revenue stream for us. The attraction of the proton beam therapy treatment in the next generation machines is that we should be able to treat many thousands of more patients per year with fewer side effects than conventional radiation therapy and with lower associated costs. Today, there are only five proton beam therapy centers operating in the United States and 26 worldwide. In the future, we hope to see hundreds of proton beam therapy centers worldwide. As a key supplier to our medical customer, we are at the core of the emerging technology and should benefit from its rapid roll-out.

From our standpoint, right now, the glass is half full. During these uncertain economic times, we are managing our business prudently. While seeking opportunities to expand our business via organic or acquired growth. Currently, enterprise values are down to attractive levels. Our balance sheet remains strong, allowing us to operate from a position of strength. We are currently evaluating acquisition candidates that would leverage our existing platform to increase the value proposition to our customers. We also see opportunities to strengthen our operational team in order to take that precision to the next level. While time seems to be at a standstill, we can assure you that we are using this downturn to put all the elements in place to profit substantially during the inevitable upturn.

On that note I would like to introduce our CFO, Mary Desmond, who will go over in greater detail our financial results for the quarter.

Thank you, Jim. I am pleased to provide further detail on the third quarter of fiscal 2009. For the three months ended December 31, 2008, sales decreased $8.6 million, or 11% from $9.6 million in the prior year. Since the Company's products are manufactured pursuant to contracts which are based on the capital budgets of our customers and potential customers, the decrease in sales reflects results of the downturn in the economy and the related lack of credit availability.

During the second quarter of fiscal 2009, we experienced a slowdown in delivery schedules placed by our customers and starting in December 2008, our largest customer significantly reduced its monthly delivery requirements. Costs of sales for the quarter decreased by $1.1 million to $5.9 million, a decrease of 15.6% from $7 million the quarter ended December 31, 2007. Gross margin was 30.7% in the third quarter of 2009 compared to a gross margin of 26.8 in the third quarter of 2008.

The gross margin improvement was largely attributed to increased revenues from the sale of scrap metal and efficiencies gained on production work. Since the carrying value of the scrap metal was nominal, substantially all of this revenue, $120,000 in December 2008 quarter, and $73,000 in the December 2007 quarter, was included in gross profit. Which results in improved gross margin.

Selling, administrative and other expenses for the quarter were $145,000, as compared to $135,000 for quarter ended December 31, 2007. Reflecting increased marketing costs. Income tax expense was $1 million in the three months ended December 31, 2008, as compared to $2.6 million in the three months ended December 31, 2007. The Company's effective tax rate was 48.5% in the December 2008 quarter as compared to 29.2% in the December 2007 quarter, due to the application of higher marginal tax rates.

As a result, net income available to common stockholders was $1 million or $0.07 per share basic, $0.04 per share diluted, for the quarter ended December 31, 2008, as compared to $1.4 million, or $0.12 per share basic, $0.05 per share diluted for the quarter ended December 31, 2007. As far as our backlog is concerned, as of December 31, 2008, the Company had a backlog of firm orders totaling approximately $40 million, compared to $45.5 million at the end of last quarter. And $33.4 million for the period ended March 31, 2008. We would however like to reiterate that there have been -- there have not been any cancellations of orders due to our recent delivery schedule slowdown. But we are now anticipating that some the previously scheduled deliveries associated with fiscal '09 will be delivered over the next several years.

We ended the quarter in a strong financial condition. At December 31, 2008, TechPrecision had working capital of $10.6 million as compared with working capital of $6.4 million at March 31, 2008. An increase in $4.2 million reflecting the Company's increased level and profitability of business. The cash flows from operations were $4.3 million for the nine months ended December 31, 2008, as compared to $0.8 million for the nine months ended December 31, 2007. The increase in operating cash flow was due to the net effect of an increase in net profits and decrease in costs incurred on uncompleted contracts. As of December 31, 2008 the Company had $5.9 million in cash and equivalents. Stockholders' equity increased to $9.2 million, up from $4.2 million on March 31, 2008.

With that, I would like to now turn the call back over to Jim for some final remarks go .

Thank you, Mary. In conclusion we were pleased with the results in the quarter in light of the difficult economic conditions which we expect to persist for some time. Fortunately, we have managed our business prudently and maintained a strong financial position to weather the storm. We're making great progress in diverging our platform and product mix to ensure long-term sustainable growth. Finally, we would like to thank you for your support and we look forward to speaking with you again in the near future. With that, let's open the floor to questions. Operator?

The question-and-answer session will be conducted electronically. (Operator Instructions) We'll take our first question from [Andrew Warden] (inaudible).

Hey, guys. So let's see. Just first question, I'm just trying to sort out the -- in the press release, you mentioned that you could go negative net income, which kind of really worries me. What -- just trying to establish a baseline, kind of where the breakeven baseline is? If you did 8 and change for the quarter, I think 8.5 for the quarter, 62% with solar, that would leave $3 million other and I guess 23% out of the total would be about $2 million. So basically it sounds like $2 million medical, $1 million other, and 5 and change million solar, roughly speaking. So I guess what I'm trying to figure is back in the day, you had $20 million in sales and none of it was medical and none of it was solar three years ago, which was about $5 million a quarter and that's now looks like 1 million to 1.5 million a quarter so that business has declined really substantially. What -- can you -- I don't know. I'm trying to figure -- I guess the first question would be, in the solar business, is that going to go to zero? Did it go to zero on the monthly basis in December, month December? Has it dropped to zero or is it running at some level or is it like zero right now?

Andrew, we are not at zero with our solar customer.

Okay.

We have ongoing delivery schedule with them, but from October until now, that quickly, we ramped down to about 17% of what our delivery schedule was before and it all hit real hard in the December period.

That's what I'm hearing out of the world, yes.

But we have an ongoing delivery schedule with that customer. We maintain a good relationship with them and we feel, we believe it will ramp back up. I mean, all our news is telling us that solar companies are expanding their facilities, but they're pushing out on their deliveries of their equipment, their capital equipment. It's telling us that it should resume soon. At what level, we can't quantify right now but we are anticipating it at some point moving up again.

So -- and that's what -- yeah, that's what GT Solar's been saying on their public announcement that it should ramp up back a couple quarters out. So 17%, so just -- your peak period was -- you were running at -- was that 4 million, 5 million, $6 million a quarter in that business or something? Ballpark? I forget. It was 60% of your revenues and your quarter was, what, 10 -- like 10 last quarter or something, 11 last quarter. So 7 million, so 17% so very roughly, sounds like about 1 million to 1.5 million a quarter would be what it's sort of running at this quarter? I mean, is that--?

Approximately.

Very rough. Okay. And then -- okay. And what else? So the -- what other business can you guys -- can you bring business from the past back that you used to do? In other words, you used to be doing a lot of other business that was more mundane and so on.

This downturn is unlike any other downturn we've ever seen before. It's surprising, as a matter of fact. It's gone so hard down, so quickly, yet we are getting inundated with quoting new work. It's like everybody has their projects ready to go. They're waiting for the financial markets to ease up a bit so they can fund their programs. And we are looking at a number of long-term production programs that as soon as it unfreezes, we believe they are going to come popping in, yet we're not sitting there, waiting for that to happen. We are diligent on all fronts to diversify our organization.

Okay. Your ARs were up as you mentioned to pretty high level for you guys. I mean, they're not crazy, but how quickly can you bring the AR back down again, do you think?

I'll let Mary answer that.

Well, I think that that's an ongoing -- we work on that every day. But I think that that's still just a representation of all of the outside world buckling down also and just kind of stringing their vendors out a little bit longer too. That's kind of the feedback we're getting but I think that that should come back in line relatively quickly.

By the end of March quarter, do you think?

I would say probably not by the end of March quarter, no.

Will there be maybe some improvement in DSOs do you think by then?

I would say no, I would say it would probably stay pretty (inaudible) to what it is right now.

It all depends on what the market's going to do, Andrew. We are as vigilant as we can be on a daily basis on our accounts receivable. Any problems we perceive we're on to it immediately. We have a whole procedure as to what we maintain.

The breakeven for the Company, I mean you mentioned that you could go net income negative.

I didn't say that. I said we cannot guarantee you that if this persists that we could operate profitably. I'm putting language out there that doesn't sugar coat anything, Andrew. We have no idea, as we continue to evaluate what's going on we have no basis to quantify how long this thing is going to go but we are diligent with what we're doing.

Okay.

And operating the organization as prudently as possible.

How scalable is your overhead? I mean, how scalable is your overhead -- how quickly can you scale your overhead to keep to generating positive cash flow and income, do you think?

We work on it on a daily basis. I can't quantify that right now either.

Okay. I mean, if you look at -- if I look at $8.5 million of revenue for the quarter and you have $2 million operating income it looks like you could take a pretty good whack to the revenues and still be slightly operating income positive?

Yes, we believe so too.

Yes.

And we will be as proactive as possible and eliminate whatever costs we can as we do daily, even in good times.

And the medical, one last question, and I'll go shut up, but the medical business was you said 23% in December, which is great. I mean, triple percentagewise, triple from the quarter before which is excellent. Is that something -- can that continue to grow in dollars per quarter?

Absolutely.

Okay. I mean, could we anticipate a March quarter would even be bigger than December or is it not--?

Right now, Andrew, we're building the first few machines, the first lead machines. They have them in house. They're being built as we speak and everything is being put together for the first roll-out, the first machine roll-out to the first customer. And once that's in place, it will be installed. It will be checked for everything -- that everything is working correctly and it will go for it's 5-10-K approval and once that occurs, we anticipate this thing rolling up. So until that happens, we're anticipating by the middle of the summer, that those -- that thing will be installed and when the 5-10-K approval, I could confidently say or hope that it should be obtained by the customer by the end of this calendar year.

You should have revenues -- you should have revenue -- so approximately--?

We have revenues right now. As those things keep progressing we will begin more machines, so.

And those approximately, you said 23% of last quarter revenue, looks like slightly over $2 million for December quarter in revenue from that medical stuff. So I mean, can that sustain from that level and grow quarter by quarter through the year or is it more lumpy, bumpy than that?

As soon as the first one rolls out and is operating we think it will escalate from there.

What I'm saying is will it stay at like a $2 million per quarter level until then or will it -- is it more -- does it fall off and then jump after it gets approval kind of?

It will probably go plateau until the first one is installed. But I -- until things progress a little further, and they're getting there quite rapidly, I can't even guess at that one right now.

But you're saying it may -- did you say it may plateau at $2 million a quarter and then could grow or you're saying you can't guess at that?

Can't guess at that. I know it will grow once the first machine is installed and treating a patient. I believe the market's waiting for that to occur.

Okay. Thanks a lot.

Okay.

We'll move to our next question from [Tony Pollock], Maxim Group.

Good morning.

Hi, Tony, how are you?

Good, how are you?

Good.

Just wanted your comments and obviously not knowing on what potential acquisitions you've been looking at as compared to potentially buying our own stock in the $0.50 area, when I look at that and compare it to book value and cash flow and hopefully cash flow in the future, I'm wondering if you can give me some feedback, how that stock valued at $0.50 a share compares to potential acquisitions in terms of attractiveness?

Well, Tony, our I guess philosophy would be to use any available capital to make an acquisition rather than buying our stock back.

And you're--?

And we -- in order to make an acquisition, we need to get creative.

Right.

Not too creative. Enterprise values are down. People we were looking at last year who were asking exorbitant amounts of money are coming in line to where we believe these things are great value to TechPrecision going forward.

Right.

And I would rather use our capital, but that will be pursuant to what the Board decides to grow our organization, rather than buy our stock back.

Right. Okay. Well, I guess as a long-term shareholder you have to make those decisions as we all do. Just seems like there are a lot of companies out there that when they are making money and selling at reasonable prices to book, to go in and buy their own stock, especially when they have great balance sheets like you.

We have evaluated that, yes.

I don't know if -- is it public knowledge on where the first machine for the medical technology is going to be going?

I don't know, truthfully, if it's public knowledge.

Okay.

I believe it has been put out there, but I don't want to comment on that.

Okay. If you believe it -- okay.

It's a US-based hospital.

Okay. Has there been any more public efficiency reports in terms of this technology?

I haven't seen anything of that nature. It's a proven technology. They're reducing the footprint of it.

Okay. In terms of nuclear, we've been talking about nuclear for a long time, yet it always seems to be very far out. Was wondering if you can give me a little more feedback on when nuclear will become a salable industry to you?

Right now, we're building stuff right now, Tony. However, all the work that's been built right now, new work that's being built, like for the AP1000, Westinghouse version, for example, is being put into China. We're still waiting for application approvals in the United States. I know there are firm orders in the United States for the AP1000. When those begin construction, I can't guess. Everything that's being made for the Chinese locations, all the big forgings, it's uneconomical to manufacture the forgings, send them to the United States to be fabbed, the additional fab work, build-up to be done and the machining work and then send them back to the Far East again. So those big pieces are being done over there. We anticipate that this industry will ramp up and we are prepared for it. We have been ready with our nuclear program for over 30 years and have been fully certified at the highest level and we are getting one inquiry after another. We still believe to be over a year away, if not a little further. But we are prepared and we believe it will be significant work going forward.

Is there anything in Obama's plan to increase funding for nuclear?

I didn't see anything. Although I haven't dissected the whole plan.

Okay. Thank you.

We'll move to our next question from [Barry Deerder], Jesup & Lamont.

Good morning, Jim.

Hi, Barry, how are you?

Doing very well.

Good.

If feasible, could you clarify your comment in regards to levering your existing expertise into the wind and particularly geothermal segments, alternative energy space?

Can you repeat the question for me, Barry?

I said if feasible, could you clarify your comment in regards to levering your existing expertise into the wind and particularly geothermal segments of the alternative energy space?

Absolutely. Recently, well, recently, over the last quarter or so, we have been evaluating requests for quotation for a different kind of wind turbine. This is not made from a -- the housing is not made from a casting, it is more complete fabrication and machining. And it fits our facility and operations perfectly. It's of the 900KW version and we would do the whole thing turnkey here. And it's my understanding there are multiple, multiple units sold through the United States already. And they approached us and asked us if we could work with the entire program for them. It's very exciting to us, unlike lugging around these big castings on all the other types. This is -- it's a different look at things.

Geothermal work is another group that approached us, based on a completely fabricated geothermal turbine. They're a manufacturing group. They're looking for -- they're a design firm, with that -- that holds the intellectual property and looking for a manufacturing partner. It's multiple units. It fits our bill and work scope perfectly and we're working diligently to put that program together as well. Very exciting, both of them.

Thanks a lot.

We'll now take our next question from [Richard Moonski], Max Communications.

Jim.

Yes.

How you doing?

Hi, Richard, how are you.

Good, thanks.

Nice to speak with you again.

One of the questions was pretty much you already answered about acquisitions. In this environment right now with -- you say you're getting companies calling you up for bids right now to bid on certain projects. How aggressive are you with your sales team and are you looking at hiring possibly other sales guys to try to take advantage of the economy that way right now, to try to take business away from other companies that you're competing with? How aggressive you've been right now.

Well, Richard, I'll tell you, since the inception of inception of this place we've been aggressive as possible of digging you new work out that fits our work statement as we're quoting jobs that are requested of us. I'd say we're just as aggressive there as we are on the quotes requested. We believe right now that we have an adequate sales team to cover the whole thing. Marketing, if I were going to be expanding anywhere it would be in the marketing of our services, identifying worldwide all the pieces that would fit our bill correctly and then attacking them.

Right. Okay.

But we are being aggressive on all fronts and we never cease doing that.

Okay. One last question. Has there been any talk with the inside, with the Board members, now that the numbers are out and I agree with you about the Company keeping the money aside, not buying back stock and using it for hopefully a good acquisition, but has there been any -- are you making the Board aware that look, the doors are going to open up soon, if it does open up soon for insiders to into the stock possibly, if they want to buy at these prices, $0.50 a share, $0.40 a share?

Anybody is available to buy at any time, outside of our blackout periods. We have a certain blackout period as a public Company to buying or selling stock, based on information we know as insiders. It's always discussed, Richard, whether it's an individual -- no individual is forced. Of course. Everyone's got their own company, it's always available to them.

Okay. All right. Well, look, Jim, keep up the good work and hopefully, like I said, you'll be a strong Company after--?

I know we will, Richard. We have a great team.

Thanks a lot, Jim. I appreciate the time.

We'll move to our next question from Anthony Marches, Monarch Capital.

Good morning. Two issues, one just a note. It would be very helpful if you would be an income statement and a balance sheet on your press release. Virtually every other Company does that. For some reason, I know -- you put out a 10-Q but for many people the Q is not as available as the press release, so if you could going forward--?

I believe it is contained in there.

Not the one I saw. But okay.

There are two.

We have the--.

Separate press releases went out.

We have the statement of operations, balance sheet and the cash flow statement on the press release. If you didn't receive that, feel free to send us an e-mail.

I got the business wire release and the one from business wire did not have it on there. I'm looking on my Bloomberg.

May be the problem with Bloomberg's data formation. Let me just double check. That's definitely how it was sent out.

Two separate press releases go out every quarter. One to announce--.

I'm looking on Yahoo! Finance right now it has all three financial statements.

I guess I use Bloomberg and not Yahoo!. In any case, you might want to check that out.

We'll check with Bloomberg and find out why they're cutting off that information.

That's good to know. Thank you.

Secondly, with the stock down at $0.50, obviously people are assuming a lot more than the worst. But in any case, they're assuming pretty bad things ahead. That being the case, what's your policy going to be with respect to disclosure of new business, new contracts, things that would in essence give people the notion that hey, you know what, maybe the worst is behind us. I'm trying to get a sense of what your policy is with respect -- I know normally you guys do not put out a lot of information with respect to contracts or opportunities so I'm just wondering going forward, since you made the statement that hey, possibly we could go into the red, the converse is okay, hey, possibly we're not going to go into the red so what's your disclosure policy going to be?

Going forward, any substantive work that we have, business partner relations, long-term agreements we will announce immediately. Small, little orders that we receive, the Board has determined that we will not be putting that out. It's very costly to do that. We will not be giving guidance going forward, as a case of point currently. And -- but any time we have some substantive information, we'll put it out there and hopefully we'll have some soon. We're anticipating some and when we do receive something like last quarter we put out a contract we received from Areva, showing people that everything we've been discussing about nuclear is coming to fruition. It's happening. It's beginning. So we're going to put it out there as we can.

Right. Question regarding the medical side. Their goal, the PBR team machine, their goal is to get the 5-10-K approval.

Correct.

As far as you can tell, where are they now in this process? My understanding is that there's several levels of approvals, in other words, with -- so just, in your opinion, where are they right now, as it relates to you?

Since we've began working with this organization, they -- I'll have you know, they are the most professional and solid team we've ever worked with. They're fantastic people. Ingenious people. And they have been working with the FDA constantly, jumping hurdles as they progress in their technology. And my understanding, they have passed these hurdles or jumped these hurdles with margin to spare. It's very technical work in the physics environment, coupling up with electronics and software and they're taking, going through their steps. Most recently, they completed a test, a big benchmark, and they completed it with flying colors. So there was a big sigh of relief throughout the whole team.

That was what, the Tesla.

They had a test over in Tesla. Tesla is putting together the stuff for them. They're also doing the software interface for the electronics. They can't have a magnet clenching during the treatment of a patient. That's a rapid shutdown procedure and all the software to interface with that is being completed and done and being done in a timely manner. They're working constantly to get this thing completed. They want to get it rolled out as quickly as possible. From there, we're going to be, once we receive the cryo stat from Tesla, we will be assembling it into the whole magnet module and accelerator module and the equipment will start delivering to the end users.

Okay. That's what you're thinking by the summertime, that's going to be the case?

Yes. And then everything needs to be calibrated, make sure it's working correctly and I believe their process is they have to shoot a particle, suspended in water, because the technology is proven, but their process alone, they have to, for the FDA shoot a particle suspended in water and hit the X, Y and Z axis of it and verify that to start obtaining all their final approvals.

And that test takes place in the summer, you're saying?

I don't have a handle on their exact testing schedule for the FDA. We're their large metal fabricators and integrators at the entire program.

Without you they're not going to get to a point where they can test with the FDA?

That is correct. There's a complete interface of all this stuff that's what the whole partnership arrangements are.

I get it. Just as a final note. I know you guys don't put out guidance but understand from our standpoint, as investors, no one covers the stock on a research standpoint. And, it's very difficult as investors with no outside research coverage and no guidance from the Company to accurately put together any kind of forecast.

We understand.

Just, people need a reason to buy the stock and I realize that the overall reason is hey, you're growing in the medical area, you're great fabricators of precision products and the nuclear, but on a more micro level, with no guidance anywhere, it becomes very difficult to forecast and I believe this is the reason you get such volatile movement in your stock, because the pendulum swings both ways. And right now--.

I completely understand. As a case in point, though, however, and I see where you're coming from, but I guess I need you to walk a mile in our shoes here.

Okay.

As of the end of our last quarter, our report, things were cranking along. As a matter of fact, in our alternative energy business, they were asking us to accelerate and based on that information, we would have put out certain information as guidance. And then the global market crashed and burned. The faucet turned off and I can't be more proud of the way my people have done this work and maintained the level of business we've done with what's occurred in the market. But the guidance that would have gone out based on what we knew at that time would have been hammered in this quarter. And what kind of -- results would we have seen in the stock at that point?

Yes. I'm not going to belabor the point. I understand.

Do you understand? That has been the decision of our Board not to put out guidance and--.

Okay.

That's the way we're going to handle it for the foreseeable future.

Okay. Thanks a lot.

(Operator Instructions) We'll move to our next question from [Tim Robbins], a private investor.

Hello, Jim.

Hello, Mr. Robbins, how are you, sir?

Good, thank you. Just a quick question. I understand the medical device will go out on sale for about $25 million or around area because it's coming down from about $200 million, the football field sized ones. Of that $25 million, approximately how much is your share of that?

I'm not at liberty to disclose that, sir, no disrespect. I just -- we don't -- the final stuff isn't done yet, all the testing procedures. We don't know at this point.

So you can't give an estimate of if you -- I mean, on the forecasts that you might expect going into 2010, do you have any estimate of, according to the medical Company, how many units they may want to be shipping per month and how that might ramp up. I'm just wondering, multiply those units by your share how much revenue--?

I understand where you're trying to go. Firstly, our customer would prefer that information not get out right now and I have to under confidentiality agreements and I keep pulling this out, but really, these people, our customers are draconian about their confidentiality or their confidential information and we have to take that very seriously or risk losing the work. We make, I'll tell you right now, we make 90% of the weight and size of this machine. We're going to be integrating the whole thing, testing all its procedures, and its processes and we'll be shipping it here to the end user and we're probably going to help them install it. We haven't even gotten to the install section with them as of yet. Everybody is working diligently to complete the technology and make sure the machine will be operational. From there, we have to go into the testing procedures. I -- my forecast from them is -- they have 15 firm orders is my understanding. I can give you that information because I believe it's been released everywhere else. And we're the only ones building them.

Okay.

And we anticipate the first year maybe three machines going out, the second year, five machines and then based on the orders coming in, it could ramp up to a system a month going out our door. I mean, that's what we're anticipating. That's what we're hoping will occur.

Just one other question on the solar side. I follow GT Solar as well and obviously I'm familiar with what they're saying. I wasn't quite sure exactly what parts of the GT Solar business you supply to? Could you just give me a bit more clarification on what you supply to because they've got two businesses.

We supply the PV side, sir.

What do you supply to the PV side?

I can't release that. I really can't. They do not want me to release what I make for them, any details, any specifications, nor even the number of units or the price we do for each unit. They are that adamant about it.

Okay.

I hate to put you off on this.

Would it be fair to say that if we tracked the -- our GT Solar release, their results and we track what they're doing on the PV side, and they get great orders, will that necessarily link directly and proportionately to yourselves? Or would it not work like that?

I believe so, yes. We make a key component within their PV.

If we see their backlog suddenly go up and ramp up then we can expect that they'll be pushing orders to you too?

Yes, sir.

Okay. Thanks very much.

We have no further questions at this time well.

Well, thank you, everyone. We really appreciate the number of participants and questions we had on the call today. I think as Jim shared, the Company is committed to have open and transparent communications with its investor base. We encourage any of you who would like to follow-up to give us a call and we're also always open to arranging facility tours for those of you who want to go and visit the TechPrecision facility in person. So thank you again for your participation in this call. And we look forward to coming back to you in future quarters.

Thank you.

That concludes our conference for today. We thank you very much for your attendance and have a nice day.