Alexander Shen: That’s a very complicated and difficult questions. There’s all facets of integration that need to happen. They have never had a parent company. Ranor has always had TechPrecision as the parent company. They were not a public reporting entity. Now they need to report into and roll up into a public reporting entity. Those are major pieces.
Rob Straus: Do you think that the Stadco opportunity is as great today as you thought it was when the acquisition was made two years ago?
Alexander Shen: I don’t need to think. The facts are there. This is not based on —
Rob Straus: And not the confirmation?
Alexander Shen: That’s not based on my thoughts, the facts are there. The opportunity is solid.
Rob Straus: Okay. I’ll get back into the queue and let someone else come on and ask some questions. But hopefully I’ll be back. Thank you so much, Alex, for answering those questions.
Alexander Shen: Thank you.
Operator: The next question comes from Kris Tuttle with Blue Caterpillar. Please proceed. Chris, your line is live. Okay, we’ll come back to Chris. We have a question from Ross Taylor with ARS Investment Partners. Please proceed, Ross.
Ross Taylor: Thank you. Alex, could you give us an idea of how much production was lost at Stadco over the prior two quarters due to these equipment issues. Not dollar amounts, but percentage of capacity, percentage of run rate, something of that nature.
Alexander Shen: A little difficult to give you a pat answer right now because that would take into some different assumptions of what ifs. I’m not trying to avoid answering the question.
Ross Taylor: Do you think that when you look at it, did we lose four weeks of production, eight weeks of production? What I’m getting at is, if you look at the numbers in Stadco?
Alexander Shen: It’s not a straight — the problem is it’s not a straight-line analyst answer is the problem. There are different moving pieces. If many of them collapsed, which one did what. It’s hard to understand because there’s a number of different pieces of equipment. It’s not just one or two. There are many. Double handfuls. So really need a much more need a lot of time to break it all down and analyze it. I usually spend my time neutralizing threats after I see them, so that they don’t happen again. And probably phrase it in a way that tells us we probably lost maybe somewhere around $0.25 million, maybe half of that, maybe all of that, something like that. That’s what I think for the last quarter. But again, it’s difficult to go back and try to predict what could have been. And it’s all in the past. My focus needs to be moving forward. And my focus needs to be, if I kill a threat, it needs to stay dead.
Ross Taylor: Okay. What I’m trying to understand is the last call, you made the comment that you never failed at a turnaround. You’ve done an amazing job with Ranor. It’s been an unparalleled success. And while we understand it’s, your famous description, lumpy, you’ve been able to push operating margins there into the mid-upper 30s. And that’s something to be commended. Stadco is not showing anywhere near that kind of traction. Although when you bought the business, I would have thought and comments were made around the time that it was a very similar business. So therefore you should be able to generate similar investment performance on that business. I understand there are certain cost functions. So for example, we carry a 4%, 5% lower operating margin for Stadco than we do in Ranor.
But you’ve lost a fair amount of money. We’re two years into a turnaround in this business. The last two quarters have been the worst quarters. How confident are you that we’re going to get back to where we’re operating breakeven or above as you were prior to the last few quarters overall as a company.
Alexander Shen: So I will take you back a little bit to my previous statements. The gross profit has improved. If we compare this quarter, with the same quarter one year ago, an improvement of $435,000. Okay? We lost $1.023 million from that same period one year ago. We are closing the gap, and that is a fact. We will continue to close this gap. .
Ross Taylor: How long does it take you to close that gap?
Alexander Shen: I don’t know.
Ross Taylor: You close it in this fiscal year?
Alexander Shen: Ross, please. I can’t forecast that.
