NEW YORK - Institutional Shareholder Services Inc. (ISS), a leading independent proxy advisory firm, has recommended that shareholders of TechPrecision Corporation (NASDAQ: TPCS) vote in favor of two board nominees proposed by Wynnefield Partners Small Cap Value, L.P. I and its affiliates, collectively known as the Wynnefield Group. The recommendation comes as TechPrecision's stock has declined over 36% in the past year, according to InvestingPro data, with shares currently trading at $3.63. The Wynnefield Group, who owns approximately 7% of TechPrecision's outstanding stock, has nominated General (Ret.) Gene Renuart and Robert Straus for election to the board at the upcoming Annual Meeting of Stockholders, set for December 19, 2024.
ISS's endorsement comes in the wake of its critique of TechPrecision's board for its handling of the failed Votaw transaction, which led to significant stock dilution and operational underperformance. InvestingPro data reveals concerning metrics, including negative EBITDA of $0.54M and a weak financial health score, suggesting the company faces significant challenges. For deeper insights into TechPrecision's governance and financial health, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro. The report from ISS supported the need for change on the board, suggesting that the nominees are well-suited to address the company's challenges. Specifically, ISS highlighted Straus's public board experience and financial acumen as beneficial for vetting future transactions, while Renuart's military background and board tenure at an acquisitive company were seen as relevant to TechPrecision, a defense contractor.
The advisory firm also recommended that shareholders withhold votes for four incumbent directors, including the chairman of the board and the chairman of the audit committee, attributing to them the most responsibility for recent issues impacting the company.
In response to the ISS report, Mr. Straus expressed satisfaction and readiness to work constructively with management and the board to maximize shareholder value if elected. The Wynnefield Group has urged shareholders to vote using the BLUE universal proxy card in favor of their nominees.
This recommendation by ISS is based on a press release statement and serves as a significant nod to the Wynnefield Group's efforts to instigate changes at TechPrecision. Shareholders' votes at the upcoming annual meeting will determine the composition of the board and potentially influence the company's future direction. With a concerning debt-to-equity ratio of 1.57 and negative returns on invested capital, InvestingPro analysis suggests these governance changes could be crucial for the company's turnaround. InvestingPro subscribers have access to 6 additional key insights about TechPrecision's financial health and governance metrics.
In other recent news, TechPrecision Corporation reported its first quarter of fiscal year 2025 financial results. Amid significant challenges, the company recorded an operating loss of $1.3 million, primarily attributed to severe equipment issues at its Stadco subsidiary and a one-time non-cash charge linked to a terminated acquisition. Despite these setbacks, TechPrecision saw an 8% increase in consolidated revenue compared to the same period last year. The company's backlog remained robust at $41.2 million, indicating potential for future growth.
The challenges faced by TechPrecision included nearly doubled production costs due to equipment problems at Stadco and an operating loss from a terminated acquisition. However, the firm maintained two sequential quarters of positive operating cash flow. The company's focus on tactical execution, risk mitigation, and cash flow management is evident in these recent developments.
TechPrecision's customer confidence remains high with a consolidated backlog of $41.2 million. The company expects to deliver its backlog over the next one to three years with gross margin expansion. The defense sector continues to provide meaningful opportunities for both Ranor and Stadco subsidiaries, contributing to the company's overall performance.
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