Gross margin expands to nearly 30%
Net income increases 63% year-over-year
ASHLAND, Ky., July 29, 2024 (GLOBE NEWSWIRE) -- TX Rail Products, Inc. (OTC Markets PINK: TXRP), a supplier of rail and rail products to the U.S. coal mining industry, short line railroads and tunneling contractors, today announced financial results for its third quarter of fiscal year 2024.
Mr. Shrewsbury, CEO and Chairman of TX Rail Products, Inc., commented, “With a 63% year-over-year increase in net income in the third quarter of fiscal 2024, we have delivered our ninth consecutive quarter of positive earnings despite a modest decline in revenue. We have successfully reduced our cost of goods to drive our gross margin to nearly 30%, which we believe is sustainable, and we are generating positive cash from operations. We are optimistic about the outlook for our business given the stable market conditions, healthy demand and nearly $7 million in tax loss carryforwards that can be used to offset future earnings.”
Mr. Shrewsbury, continued, “During the nine months ended June 30, 2024, we repurchased 418,084 shares of common stock under our stock repurchase program at a net cost of $17,000. We retire all stock upon repurchase and, in the near term, the Board of Directors intends to meet to approve of a new share repurchase program. We expect to fund future repurchases from cash on hand and cash flows from operating activities.”
"We are in the final stages of selecting a new audit firm and engaging an investor relations firm to enhance transparency, improve shareholder communications and raise our visibility within the investment community,” concluded Shrewsbury. “Ultimately, we aim to uplist our stock to a national exchange.”
Third Quarter Fiscal Year 2024 Financial Summary
Revenue for the third fiscal quarter ended June 30, 2024, was $1.76 million as compared to $1.79 million for the same period in the prior year, a decrease of 1.3%.
Cost of goods sold was $1.2 million as compared to $1.4 million for the same period in the prior year, a decrease of 11.2%.
Gross profit for the third quarter ended June 30,2024 increased as a percentage of revenue from 22.0% to 29.8% when compared to the same period the prior year. The increase in gross profit as a percentage of revenue is the result of higher margin products sold in the current quarter.
Operating expenses for the third fiscal quarter ended June 30, 2024, were $222,000 as compared to $197,000 for the three months ended June 30, 2023, an increase of 12.3%.
Other expense for the third fiscal quarter ended June 30, 2024, was ($2,200) as compared to other expense of ($10,100) in the same quarter the prior year.
Net income for the current third fiscal quarter was $302,000, compared to $185,000 in the third quarter of fiscal year 2023, representing an increase of 62.8%.
On June 30,2024, cash and cash equivalents were $216,000 compared to $159,000 at September 30, 2023. Net cash provided by operating activities was $336,000 for the nine months ended June 30, 2024.
Net cash used in investing activities for the first nine months of fiscal year 2024 was ($311,000) compared to ($86,000) in the prior year period. Net cash provided by financing activities for the first nine months of fiscal year 2024 was $31,000 as compared to cash used in financing activities of ($279,000) for the same period the prior fiscal year. The increase in cash provided by financing activities was primarily the result of a new line of credit of $500,000 that was used to repay loans and for current operating needs and proceeds from an additional loan used to purchase capital equipment.
Accounts receivable was $471,000 as of June 30, 2024, as compared to $803,000 as of September 30, 2023, a decrease of 41.4%.
Inventory was $3.1 million as of June 30, 2024, an increase of 19.7% as compared to $2.6 million as of September 30, 2023. The increase in inventory is the direct result of higher product sales demand.
Forward-Looking and Cautionary Statements
Except for the historical information and discussions contained herein, statements contained in this release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA) and other applicable law. When used, the words "believe", "anticipate", "estimate", "project", "should", "expect", "plan", "assume" and similar expressions that do not relate solely to historical matters identify forward-looking statements. Forward-looking statements are based on the Company's current assumptions regarding future business and financial performance. Forward-looking statements concerning future plans or results are necessarily only estimates and actual results could differ materially from expectations. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the following: our ability to implement our business strategy; our financial strategy; a downturn in economic environment; our failure to meet growth and productivity objectives; a failure of our innovation initiatives; risks from investing in growth opportunities; fluctuations in financial results and purchases; the impact of local legal, economic, political and health conditions; adverse effects from environmental matters and tax matters; ineffective internal controls; our use of accounting estimates; our ability to attract and retain key personnel and our reliance on critical skills; impact of relationships with critical suppliers; currency fluctuations and customer financing risks; the impact of changes in market liquidity conditions and customer credit risk on receivables; our reliance on third party distribution channels; Securities and Exchange Commission regulations related to trading in "penny stocks;" the continued availability of certain financing provided by our CEO; and other risks, uncertainties and factors or in materials incorporated therein by reference. Any forward-looking statement in this release speaks only as of the date on which it is made. We assume no obligation to update or revise any forward-looking statement. Notwithstanding the above, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1933, as amended, expressly state that the safe harbor for forward looking statements does not apply to companies that issue penny stocks. Because we may from time to time be considered to be an issuer of penny stock, the safe harbor for forward looking statements under the PSLRA may not be apply to us at certain times.
Contacts
William “Buck” Shrewsbury, Chairman and CEO.
(606) 928-3131
| TX Rail Products, Inc. | ||||||||
| Balance Sheets | ||||||||
| For the periods ended June 30, 2024, and September 30, 2023 | ||||||||
| Unaudited | ||||||||
| June 30, | September 30, | |||||||
| 2024 | 2023 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 215,888 | $ | 159,088 | ||||
| Accounts receivable, net of allowance for doubtful | ||||||||
| accounts of $28,0000 at June 30, 2024 and $0 at September 30, 2023 | 470,667 | 802,752 | ||||||
| Inventory, (Note 1) | 3,112,364 | 2,599,510 | ||||||
| Other current assets | 27,776 | 1,605 | ||||||
| Total current assets | 3,826,695 | 3,562,955 | ||||||
| Property and equipment, net, (Note 2) | 377,358 | 82,216 | ||||||
| Total Assets | $ | 4,204,053 | $ | 3,645,171 | ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 551,886 | $ | 966,998 | ||||
| Accrued expenses, primarily to officers, (Note 5) | 81,410 | 126,410 | ||||||
| Accrued interest to officer, (Note 5) | 559,726 | 559,726 | ||||||
| Advances from officer | 161,587 | 286,587 | ||||||
| Stockholder/officer advances for operations-warehouse rent | 222,000 | 204,000 | ||||||
| Bank-term loan-current portion | 142,192 | 79,683 | ||||||
| Other current liability | 213,067 | 153,180 | ||||||
| Total current liabilities | 1,931,868 | 2,376,584 | ||||||
| Bank-term-loan, less current portion, (Note 7) | 251,006 | 140,485 | ||||||
| Note payable to officer, (Note 5) | 2,000,000 | 2,000,000 | ||||||
| Total Liabilities | 4,182,874 | 4,517,069 | ||||||
| Commitments and Contingencies, (Note 9) | ||||||||
| Stockholders' deficit: | ||||||||
| Preferred stock: no par value, 1,000,000 shares authorized | ||||||||
| no shares outstanding | _ | _ | ||||||
| Common stock: no par value, 250,000,000 shares | ||||||||
| authorized, 45,000,000 and 45,418,084 shares issued and outstanding | ||||||||
| at June 30, 2024 and September 30, 2023 | 8,703,344 | 8,784,201 | ||||||
| Additional paid-in capital | 4,809,295 | 4,745,438 | ||||||
| Accumulated deficit | (13,491,460 | ) | (14,401,537 | ) | ||||
| Total stockholders' deficit | 21,179 | (871,898 | ) | |||||
| Total Liabilities and Stockholders' Deficit | $ | 4,204,053 | $ | 3,645,171 | ||||
| TX Rail Products, Inc. | ||||||||||||||||
| Statements of Operations | ||||||||||||||||
| For the Three Months and Nine Months Ended June 30, 2024 and June 30, 2023 | ||||||||||||||||
| Unaudited | ||||||||||||||||
| THREE MONTHS ENDED | NINE MONTHS ENDED | |||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | $ | 1,764,702 | $ | 1,787,517 | $ | 5,861,674 | $ | 5,211,352 | ||||||||
| Cost of goods sold | (1,238,977 | ) | (1,394,666 | ) | (4,259,235 | ) | (4,162,743 | ) | ||||||||
| Gross profit | 525,725 | 392,851 | 1,602,439 | 1,048,609 | ||||||||||||
| Operating expenses, except items shown | ||||||||||||||||
| separately below | 107,912 | 87,867 | 269,544 | 212,267 | ||||||||||||
| Commission expense | 34,724 | 51,613 | 183,798 | 183,798 | ||||||||||||
| Salary expense | 70,714 | 53,100 | 211,096 | 146,412 | ||||||||||||
| Professional fees | _ | _ | 558 | _ | ||||||||||||
| Bad debt expense | _ | _ | 28,000 | _ | ||||||||||||
| Depreciation expense | 8,472 | 4,915 | 15,535 | 12,597 | ||||||||||||
| Total operating expenses | 221,822 | 197,495 | 708,531 | 555,074 | ||||||||||||
| Income from operations | 303,903 | 195,356 | 893,908 | 493,535 | ||||||||||||
| Other income and (expense) | ||||||||||||||||
| Other income | 4,514 | _ | 21,036 | _ | ||||||||||||
| Gain/Loss on Disposal of Assets | _ | _ | 9,000 | |||||||||||||
| Charitable contribution | _ | (150 | ) | _ | (150 | ) | ||||||||||
| Interest expense | (6,720 | ) | (9,929 | ) | (13,867 | ) | (18,687 | ) | ||||||||
| Total other income and (expense), net | (2,206 | ) | (10,079 | ) | 16,169 | (18,837 | ) | |||||||||
| Net income | $ | 301,697 | $ | 185,277 | $ | 910,077 | $ | 474,698 | ||||||||
| Net earnings per common share | ||||||||||||||||
| Basic and diluted | $ | 0.0067 | $ | 0.0040 | $ | 0.0202 | $ | 0.0100 | ||||||||
| Weighted average of common shares outstanding - | ||||||||||||||||
| Basic and diluted | 45,000,000 | 45,853,084 | 45,092,908 | 47,121,457 | ||||||||||||