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TAT Technologies Reports 2019 Results

GEDERA, Israel, March 19, 2020 /PRNewswire/ -- TAT Technologies Ltd. (NASDAQ: TATT) ("TAT" or the "Company"), a leading provider of products and services to the commercial and military aerospace and ground defense industries, reported today its audited results for the twelve months ended December 31, 2019.

Key Financial Highlights:

  • Total revenues grew by $8.8M to $102 million for the twelve months ended December 31, 2019, compared to $93.2 million for the twelve months ended December 31, 2018, an increase of 9.5%. MRO and OEM segments contributed to the growth.
  • Gross profit for the twelve months ended December 31, 2019 increased by 85.5% to $15.6 million (15.3% of revenues) compared with $8.4 million (9% of revenues) for the twelve months ended December 31, 2018. This was achieved due to the cost decrease and efficiency increase program started at the end of 2018.
  • EBITDA for the twelve months ended December 31, 2019 increased by $7.7M to $6.5 million compared with a negative EBITDA of $1.2 million for the twelve months ended December 31, 2018.
  • Net income increased by $5.2M to $0.8 million, or $0.1 per diluted share for the twelve months ended December 31, 2019 compared with a loss of $4.4 million, or ($0.5) per diluted share for the twelve months ended December 31, 2018.
  • Cash stay stable at the level of $16M year over year.

Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with GAAP, the Company also presents a Non-GAAP presentation of Net Income and Adjusted EBITDA.  The adjustments to the Company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company's underlying operational results, trends and performance.  Non-GAAP Net Income excludes changes, income or losses, as applicable, related to one or more of the following: (1) share-based compensation expenses and/or (2) certain tax impact and/or (3) acquisition related expenses and/or (4) share in results of equity investment of affiliated companies. Adjusted EBITDA is calculated as net income before the Company's share in results and sale of equity investment of affiliated companies, share-based compensation, taxes on income, financial (expenses) income, net, and depreciation and amortization.  Non-GAAP Net Income and Adjusted EBITDA, however, should not be considered as alternatives to net income and operating income for the period and may not be indicative of the historic operating results of the Company; nor they are meant to be predictive of potential future results.  Non-GAAP Net Income and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. See reconciliation of GAAP Net Income to Non-GAAP Net Income and Adjusted EBITDA in pages 9 and 12 below.

About TAT Technologies LTD

TAT Technologies Ltd. is a leading provider of services and products to the commercial and military aerospace and ground defense industries. TAT operates under four segments: (i) Original equipment manufacturing ("OEM") of heat transfer solutions and aviation accessories through its Gedera facility; (ii) MRO services for heat transfer components and OEM of heat transfer solutions through its Limco subsidiary; (iii) MRO services for aviation components through its Piedmont subsidiary; and (iv) Overhaul and coating of jet engine components through its Turbochrome subsidiary. TAT controlling shareholders is the FIMI Private Equity Fund.

TAT's activities in the area of OEM of heat transfer solutions and aviation accessories primarily include the design, development and manufacture of (i) broad range of heat transfer solutions, such as pre-coolers heat exchangers and oil/fuel hydraulic heat exchangers, used in mechanical and electronic systems on board commercial, military and business aircraft; (ii) environmental control and power electronics cooling systems installed on board aircraft in and ground applications; and (iii) a variety of other mechanical aircraft accessories and systems such as pumps, valves, and turbine power units.

TAT's activities in the area of MRO Services for heat transfer components and OEM of heat transfer solutions primarily include the MRO of heat transfer components and to a lesser extent, the manufacturing of certain heat transfer solutions. TAT's Limco subsidiary operates an FAA-certified repair station, which provides heat transfer MRO services for airlines, air cargo carriers, maintenance service centers and the military.

TAT's activities in the area of MRO services for aviation components include the MRO of APUs, landing gears and other aircraft components. TAT's Piedmont subsidiary operates an FAA-certified repair station, which provides aircraft component MRO services for airlines, air cargo carriers, maintenance service centers and the military.

TAT's activities in the area of overhaul and coating of jet engine components includes the overhaul and coating of jet engine components, including turbine vanes and blades, fan blades, variable inlet guide vanes and afterburner flaps.

For more information of TAT Technologies Ltd., please visit our web-site:

www.tat-technologies.com

Safe Harbor for Forward-Looking Statements

This press release contains forward-looking statements which include, without limitation, statements regarding possible or assumed future operation results. These statements are hereby identified as "forward-looking statements" for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause our results to differ materially from management's current expectations. Actual results and performance can also be influenced by other risks that we face in running our operations including, but are not limited to, general business conditions in the airline industry, changes in demand for our services and products, the timing and amount or cancellation of orders, the price and continuity of supply of component parts used in our operations, the change of control that will occur on the sale by the receiver of the Company's shares held by our previously controlling stockholders, and other risks detailed from time to time in the Company's filings with the Securities Exchange Commission, including, its annual report on form 20-F and its periodic reports on form 6-K. These documents contain and identify other important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. Stockholders and other readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any forward-looking statement.

 

 


TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands)










December 31,




2019


2018

ASSETS












CURRENT ASSETS:






   Cash and cash equivalents



$       15,959


$       15,950

   Accounts receivable, net



21,167


19,277

   Inventory, net



43,907


38,605

   Other current assets and prepaid expenses



2,605


3,627







   Total current assets



83,638


77,459







NON-CURRENT ASSETS:






   Investment in affiliates



956


1,078

   Funds in respect of employee rights upon retirement



1,404


2,253

   Deferred income taxes



228


162

Property, plant and equipment, net



21,008


21,424

Operating lease right of use assets



6,664


-

Intangible assets, net



777


911







    Total non-current assets



31,037


25,828

   Total assets



$     114,675


$     103,287







LIABILITIES AND EQUITY












CURRENT LIABILITIES:






   Accounts payable



$         11,981


$         8,270

   Accrued expenses



7,393


6,411

   Operating lease liabilities



1,330


-







   Total current liabilities



20,704


14,681







NON CURRENT LIABILITIES:






   Other long-term liabilities



62


180

   Liability in respect of employee rights upon retirement



1,751


2,648

   Deferred income taxes



1,100


1,484

   Operating lease liabilities



5,688


-







   Total non-current liabilities



8,601


4,312

Total liabilities



29,305


18,993







EQUITY:






Share capital



2,809


2,809

Additional paid-in capital



65,573


65,535

Treasury shares, at cost, 274,473 shares at December 31, 2019 and 2018



(2,088)


(2,088)

Accumulated other comprehensive income (loss)



26


(206)

Retained earnings



19,050


18,244

Total shareholders' equity



85,370


84,294

Total liabilities and shareholders' equity



$       114,675


$       103,287







 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data)






2019


2018









Revenue:







Products



$    25,019


$    23,151


Services



77,013


70,027





102,032


93,178









Cost of revenue:







Products



21,557


23,807


Services



64,913


60,980





86,470


84,787









Gross profit



15,562


8,391









Operating expenses:







Research and development, net



74


553


Selling and marketing



5,259


4,913


General and administrative



8,251


8,559


Other expenses (income)



-


(4)












13,584


14,021









Operating income (loss)



1,978


(5,630)









Financial expenses



(1,299)


(1,569)


 Financial income



848


1,467









Income (loss) before taxes on income (tax benefit)



1,527


(5,732)









Taxes on income (tax benefit)



589


(1,464)









Income (loss) before share of equity investment



938


(4,268)









Share in results of equity investment of affiliated

companies



(132)


(140)









Net income (loss)



$    806


$    (4,408)









Basic and diluted loss per share














Net income (loss) per share basic and diluted



$    0.1


$    (0.5)









Weighted average number of shares outstanding:







Basic



8,874,696


8,864,885


Diluted



8,874,696


8,864,885












 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



(In thousands)









2019


2018











Net income (loss)



$      806


$    (4,408)


Other comprehensive income (loss), net







Net unrealized gains (losses) from derivatives



372


(672)


Reclassification adjustments for gains from derivatives included in net 
     income



(140)


331


Total other comprehensive income (loss)



232


(341)









Total comprehensive income (loss)



$      1,038


$      (4,749)









 

 















TAT TECHNOLOGIES AND ITS SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY


(In thousands, except share data)






Share capital




Accumulated














Additional


other










Number of




paid-in


comprehensive


Treasury


Retained






shares issued


Amount


capital


income (loss)


shares


earnings


Total equity


















BALANCE AT DECEMBER 31, 2017


9,122,501


$            2,802


$       65,073


$            135


$            (2,088)


$            22,652


$            88,574


CHANGES DURING THE YEAR ENDED 
     DECEMBER 31, 2018:
















Comprehensive income


-


-


-


(341)


-


(4,408)


(4,749)


 Share based compensation


-


-


272


-


-


-


272


 Exercise of options


26,668


7


190


-


-


-


197


BALANCE AT DECEMBER 31, 2018


9,149,169


$            2,809


$       65,535


$            (206)


$            (2,088)


$            18,244


$            84,294


CHANGES DURING THE YEAR ENDED 
     DECEMBER 31, 2019:
















Comprehensive income


-


-


-


232


-


806


1,038


Share based compensation


-


-


38


-


-


-


38


BALANCE AT DECEMBER 31, 2019


9,149,169


$            2,809


$       65,573


$            26


$            (2,088)


19,050


$            85,370


 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)






2019


2018








CASH FLOWS FROM OPERATING ACTIVITIES:






Net income (loss)


$      806


$      (4,408)








Adjustments to reconcile net income to net cash provided by (used in) 
     operating activities:






Depreciation and amortization


4,372


4,185


Loss on sale of property, plant and equipment


-


-


Loss (gain) from change in fair value of derivatives


(311)


382


Interest from short-term bank deposits and restricted deposits


-


-


Change in provision for doubtful accounts


38


(347)


Share in results of affiliated companies


132


140


Share based compensation


38


272


Exchange differences for lease liabilities


354


-


Liability in respect of employee rights upon retirement


(897)


(587)


Deferred income taxes, net


(450)


(102)


Changes in operating assets and liabilities:






     Decrease (increase) in trade accounts receivable


(1,928)


6,814


Decrease (increase) in other current assets and prepaid expenses


2,500


(1,575)


     Decrease (increase) in inventory


(5,388)


161


     Increase (decrease) in trade accounts payable


3,292


(969)


     Increase (decrease) in accrued expenses


982


(1,920)


     Increase (decrease) in other long-term liabilities


(118)


34


Net cash provided by operating activities


$      3,422


$      2,080








CASH FLOWS FROM INVESTING ACTIVITIES:






Investment in affiliated company


(10)


(26)


Funds in respect of employee rights upon retirement


-


(22)


Proceeds from sale of property and equipment


-


7


Purchase of property and equipment


(3,403)


(4,270)


Maturities of short-term deposits


-


470


Net cash used in investing activities


$   (3,413)


$   (3,841)








CASH FLOWS FROM FINANCING ACTIVITIES:






Dividend paid


-


-


Exercise of options


-


197


Net cash provided by (used in) financing activities


-


197








NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS


9


(1,564)


CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR


15,950


17,514








CASH AND CASH EQUIVALENTS AT END OF YEAR


$    15,959


$    15,950








 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES


RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP)


(UNAUDITED)


(In thousands)








2019


2018







Net income (loss)

$           806


$         (4,408)


Adjustments:





Share in results and sale of equity 
     investment of affiliated companies

132


140


Taxes on income (tax benefit)

589


(1,464)


Financial expenses, net

451


102


Depreciation and amortization

4,516


4,185


Share based compensation

38


272


Adjusted EBITDA

$             6,532


$       (1,173)







 

 

Contact:

Mr. Ehud Ben-Yair
Chief Financial Officer
Tel: 972-8-862-8503
ehudb@tat-technologies.com

 

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SOURCE TAT Technologies Ltd