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TAT Technologies Reports First Quarter 2022 Results

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NETANIA, Israel, May 31, 2022 /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 unaudited results for the three-month period ended March 31, 2022.

Financial highlights for the first quarter of 2022:

  • Revenues for Q1 2022 increased by 8.1% to $19.9 million compared to $18.4 million in Q1 2021.
     

  • Gross profit for Q1 2022 was $3 million (15.2% of revenues) compared to $3.4 million in Q1 2021 (18.5% of revenues).
     

  • Adjusted EBITDA for Q1 2022 decreased to $0.5 million compared to $1.6 million in Q1 2021.
     

  • Net loss for Q1 2022 was $1.6 million compared to a net income of $0.6 million in Q1 2021.
     

  • Q1 2021 Gross Profit, EBITDA and Net Income included government rants in the amount of $1.4 million ($1 million recorded in the COGS and an additional $0.4 million recorded in G&A)

Mr. Igal Zamir, TAT's CEO and President commented on the results: "As air travel begins to recoup and more and more plains resume flights, we see a growing demand for our services and products and an increase in order intake. We are working relentlessly to meet this demand despite strong headwinds resulting from supply chain issues and shortages in raw materials, which are hampering our ability to fully ramp up our production.

During Q1 of 2022 we continued making significant steps in improving our manufacturing efficiencies as we successfully completed merging our 2 facilities in Israel to a single manufacturing site. We believe the cost savings expected from this unification will begin to impact us toward the second half of 2022.

In addition we continue to invest in building additional MRO and production capabilities, following the strategic contacts recently signed with Honeywell and hope to have these new capabilities available by the end of this year."

"Given our growing backlog, the continued recovery of commercial airline traffic and the strategic agreements we signed with Honeywell, coupled with the actions we have taken and to improve our manufacturing efficiencies, I am optimistic about our ability to continue our topline and bottom line growth." concluded Mr. Zamir

Mr Zamir added: "Mr. Ron Ben-Haim has informed our Board of Directors of his retirement from his directorship position effective, May 30, 2022. I wish to thank Ron for his service on behalf of the Company, its board of directors, its management and its employees"

Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with GAAP, the Company also presents 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. Adjusted EBITDA is calculated as net income excluding the impact of: the Company's share in results of affiliated companies, share-based compensation, taxes on income, financial (expenses) income, net, and depreciation and amortization. Adjusted EBITDA, however, should not be considered as alternative to net income and operating income for the period and may not be indicative of the historic operating results of the Company; nor it is meant to be predictive of potential future results. Adjusted EBITDA is not measure of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. See reconciliation of Adjusted EBITDA in pages 13 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

Contact: 
Mr. Ehud Ben-Yair 
Chief Financial Officer 
Tel: 972-8-862-8503 
ehudb@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)






March 31,


December 31,

2022


2021


(unaudited)


(audited)

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$              12,798


$      12,872

Accounts receivable, net

14,686


13,887

Inventory, net

43,210


41,003

Other current assets and prepaid expenses

4,327


4,219





Total current assets

75,021


71,981





NON-CURRENT ASSETS:




 Restricted deposit

333


343

 Investment in affiliates

668


695

Funds in respect of employee rights upon retirement

1,086


1,157

 Deferred income taxes

1,147


1,252

Intangible assets, net

1,777


1,829

Property, plant and equipment, net

33,780


30,462

Operating lease right of use assets

2,534


3,114





Total non-current assets

41,325


38,852

Total assets

$                  116,346


$    110,833





 

 

 

LIABILITIES AND EQUITY








CURRENT LIABILITIES:




Current maturities of long-term loans

$                  1,088


$        691

Credit line from bank

3,016


6,008

Accounts payable

9,860


9,093

Accrued expenses

6,917


6,959

Operating lease liabilities

609


1,169

Provision for restructuring plan

312


657





Total current liabilities

21,802


24,577





NON CURRENT LIABILITIES:




    Long-term loans

15,917


5,979

Liability in respect of employee rights upon retirement

1,387


1,504

Operating lease liabilities

1,934


1,989





 Total non-current liabilities

19,238


9,472

Total liabilities

$                41,040


$        34,049





EQUITY:




Share capital

2,820


2,809

Additional paid-in capital

65,976


65,871

Treasury stock at cost

(2,088)


(2,088)

Accumulated other comprehensive income

1


33

Retained earnings

8,597


10,159

Total shareholders' equity

75,306


76,784





Total liabilities and shareholders' equity

$                  116,346


$                110,833





 

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF INCOME


(In thousands, except share and per share data)








Three months ended


Year ended



March 31,


December 31,



2022


2021


2021



(Unaudited)


(Unaudited)


(Audited)









Revenues:







Products

$         6,319


$         4,154


$    25,870


Services

13,635


14,206


52,103



19,954


18,360


77,973









Cost of goods:







Products

5,744


3,610


23,761


Services

11,165


11,352


42,942



16,909


14,962


66,703


Gross Profit

3,045


3,398


11,270









Operating expenses:







Research and development, net

(27)


136


517


Selling and marketing

1,335


1,205


5,147


General and administrative

2,385


1,622


8,354


Other income

(81)


(13)


(468)


Restructuring and other expenses

927


533


1,755



4,539


3,483


15,305









Operating loss

(1,494)


(85)


(4,035)









Financial income (expenses), net

66


397


(540)









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

(1,428)


312


(4,575)









Taxes on income (tax benefit)

107


(131)


(662)









Income (loss) before share of equity investment

(1,535)


443


(3,913)









Share in results of affiliated companies

(27)


(12)


(76)


Net income (loss) from continued operation

$    (1,562)


$    431


$       (3,989)


 

Net income from discontinued operation

-


156


$          427


 

Net income (loss)

$          (1,562)


$           587


$     (3,562)









 

 

 

Basic and diluted income per share














Net income (loss) per share basic and diluted from continued operation

$     (0.17)


$     0.05


$    (0.45)


Net income per share basic and diluted from discontinued operation

$    -


$    0.02


$   0.05


Net income (loss) per share basic and diluted

$     (0.17)


$   0.07


$     (0.4)









Weighted average number of shares outstanding







Basic

8,886,546


8,874,696


8,874,696


Diluted

8,886,546


8,874,696


8,874,696









 

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)



Three months ended


Year ended


March 31,


December 31,


2022


2021


2021


(Unaudited)


(Unaudited)


(Audited)







Net income (loss)

$         (1,562)


$         587


$     (3,562)

Other comprehensive income (loss)






Net unrealized losses from derivatives

(32)


(143)


(76)

       Reclassification adjustments for gains included in net     income and inventory

-


-


(19)

        Total comprehensive income (loss)

$          (1,594)


$         444


$     (3,657)







 

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)




Share capital




Accumulated










Number of
shares issued


Amount


Additional
paid-in capital


other
comprehensive
income (loss)


Treasury shares


Retained earnings


Total equity


















BALANCE AT DECEMBER 31, 2019


9,149,169


$            2,809


$       65,573


$            26


$            (2,088)


$            19,050


$            85,370


CHANGES DURING THE YEAR ENDED DECEMBER 31, 2020:
















Comprehensive income (loss)


-


-


-


102


-


(5,329)


(5,227)


 Share based compensation


-


-


138


-


-


-


138


BALANCE AT DECEMBER 31, 2020


9,149,169


$            2,809


$       65,711


$            128


$            (2,088)


$            13,721


$            80,281


CHANGES DURING THE YEAR ENDED DECEMBER 31, 2021:
















Comprehensive loss


-


-


-


(95)


-


(3,562)


(3,657)


 Share based compensation


-


-


160


-


-


-


160


BALANCE AT DECEMBER 31, 2021


9,149,169


$            2,809


$       65,871


$            33


$            (2,088)


$            10,159


$            76,784


CHANGES DURING THE PERIOD ENDED MARCH 31, 2022 (unaudited):
















Comprehensive loss


-


-


-


(32)


-


(1,562)


(1,594)


Exercise of option


11,850


11


56


-


-


-


67


Share based compensation


-


-


49


-


-


-


49


BALANCE AT MARCH 31, 2022 (unaudited)


9,161,019


$            2,820


$       65,976


$            1


$            (2,088)


8,597


$            75,306





















 

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)






Three months ended


Year ended




March 31,


December 31,




2022


2021


2021




(Unaudited)


(Unaudited)


(audited)










CASH FLOWS FROM OPERATING ACTIVITIES:








Net income (loss) from continued operations


(1,562)


431


(3,989)










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
















Depreciation and amortization


973


1,056


4,881


Loss (gain) from change in fair value of derivatives


17


(9)


(19)


Provision for doubtful accounts


-


-


248


Share in results of affiliated Company 


27


12


76


Share based compensation


49


26


160


 Noncash finance expense


(35)


(397)


(73)


Lease modification


-


-


(1,315)



Increase (decrease) in provision for restructuring expenses


(345)


533


657


Liability in respect of employee rights upon retirement


(117)


(127)


94


Impairment of fixed assets


-


-


1,820


Capital gain from sale of fixed assets


(81)


-


(468)


Deferred income taxes, net


107


(136)


(686)


Government loan forgiveness


-


(1,442)


(1,442)


Changes in operating assets and liabilities:








    Increase in trade accounts receivable


(895)


(1,573)


(2,934)


    Decrease (increase) in other current assets and prepaid expenses


(62)


(181)


(959)


Decrease (increase) in inventory


(2,222)


798


(681)


    Decrease in trade accounts payable


536


(106)


2,571


    Increase (decrease) in accrued expenses


42


560


(218)


    Decrease in other long-term liabilities


(161)


(27)


8


Net cash provided by (used in) operating activities


$   (3,729)


$     (583)


$      (2,269)










CASH FLOWS FROM INVESTING ACTIVITIES:








Proceeds from sale of property and equipment


84


-


1,163


Purchase of property and equipment


(4,010)


(7,605)


(16,247)


Purchase of intangible assets


-


(285)


(555)


Cash flows used in investing activities


$  (3,926)


$  (7,890)


$   (15,639)










CASH FLOWS FROM FINANCING ACTIVITIES:








Short-term credit received (Repayments) from banks


(3,000)


3,000


3,000


Proceeds from long-term loans received


10,504


3,042


3,042


Exercise of options


67


-


-


Cash flows provided by financing activities  


$7,571


$6,042


$           6,042










 

 

 

CASH FLOWS FROM DISCONTINUED ACTIVITIES:








Net profit from discontinued operation


-


156


777


Net cash provided by discontinued activities


$     -


$     156


$      777










Net decrease in cash and cash equivalents and
restricted cash

 


(84)


(2,275)


(11,089)


Cash and cash equivalents and restricted cash at beginning of period


13,215


24,304


24,304










Cash and cash equivalents and restricted cash at the end of period


$    13,131


$    22,029


$    13,215


 

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES




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


(In thousands)





Three months ended


Year ended



March 31,


December 31,



2022


2021


2021
















Net income

$          (1,562)


$           587


$        (3,562)


Adjustments:







Share in results and sale of equity investment of affiliated companies

27


12


 

76


Taxes on income (tax benefit)

107


(131)


(662)


Financial expense/ (income), net

(66)


(397)


540


Depreciation and amortization

1,025


1,105


5,420


Restructuring expenses

927


533


1,755


Discontinued operation income

-


(156)


(427)


Share based compensation

49


26


160


Adjusted EBITDA

$            507


$            1,579


$      3,300









 

Cision
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SOURCE TAT Technologies Ltd.