TX Rail Products, Inc. Reports Fiscal 2024 Third Quarter Results

Rhea-AI Summary

TX Rail Products, Inc. (OTC: TXRP) reported strong financial results for Q3 FY2024. Net income increased 63% year-over-year to $302,000, marking the ninth consecutive quarter of positive earnings. Despite a slight 1.3% revenue decline to $1.76 million, gross margin expanded to nearly 30% from 22% in the prior year. The company achieved this through reduced cost of goods sold, down 11.2% to $1.2 million.

Key highlights include:

• Operating expenses increased 12.3% to $222,000
• Cash and cash equivalents rose to $216,000 from $159,000 at FY2023 end
• Inventory increased 19.7% to $3.1 million due to higher product demand
• 418,084 shares repurchased at $17,000 net cost

The company plans to select a new audit firm, engage an investor relations firm, and aims to uplist to a national exchange.

Positive

• Net income increased 63% year-over-year to $302,000
• Gross margin expanded from 22% to 29.8%
• Cost of goods sold decreased by 11.2% to $1.2 million
• Positive cash flow from operations of $336,000 for the first nine months of FY2024
• Inventory increased 19.7% due to higher product sales demand
• New $500,000 line of credit secured for operations and equipment purchases
• $7 million in tax loss carryforwards available to offset future earnings

Negative

• Revenue declined 1.3% year-over-year to $1.76 million
• Operating expenses increased 12.3% to $222,000
• Accounts receivable decreased 41.4% to $471,000

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

FAQ

What was TX Rail Products' (TXRP) net income for Q3 FY2024?

TX Rail Products (TXRP) reported a net income of $302,000 for Q3 FY2024, representing a 63% increase year-over-year from $185,000 in Q3 FY2023.

How did TX Rail Products' (TXRP) gross margin change in Q3 FY2024?

TX Rail Products' (TXRP) gross margin expanded from 22.0% in Q3 FY2023 to 29.8% in Q3 FY2024, primarily due to higher margin products sold in the current quarter.

What was TX Rail Products' (TXRP) revenue for Q3 FY2024?

TX Rail Products (TXRP) reported revenue of $1.76 million for Q3 FY2024, a slight decrease of 1.3% compared to $1.79 million in the same period of the previous year.

How many shares did TX Rail Products (TXRP) repurchase in the first nine months of FY2024?

TX Rail Products (TXRP) repurchased 418,084 shares of common stock under its stock repurchase program at a net cost of $17,000 during the nine months ended June 30, 2024.