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TAT Technologies Reports First Quarter 2021 Results

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GEDERA, Israel, May 13, 2021 /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, 2021.

Financial highlights for the first quarter of 2021 (unaudited):

  • Revenues for Q1 2021 increased by 11% to $18.3 million compared to revenues of $16.5 million in Q4 2020 and decreased by 25% compared to $24.6 million in Q1 2020.

  • Gross profit for Q1 2021 increased by 259% to $3.4 million compared to $0.9 million in Q4 2020 and decreased by 26% compared to $4.6 million in Q1 2020.

  • Gross margin for Q1 2021 improved to 18.6% compared to 5.7% in Q4 2020 and compared to 18.5% in Q1 2020.

  • Adjusted EBITDA for Q1 2021 increased by $2.7 million to $1.6 million compared to a loss of $1.1 million in Q4 2020 and decreased by 36% compared to $2.5 million in Q1 2020.

  • Net income for Q1 2021 increased to $0.6 million compared to a loss of $1.9 million in Q4 2020 and compared to net income of $0.4 million in Q1 2020.

The Company is proceeding with its recently announced plan to improve its cost structure, and in that respect has recently begun executing on its plan to consolidate the Company's operations in Kiryat Gat, Israel and Tulsa, Oklahoma. Among other things, such actions will enable the Company to concentrate its heat exchanges cores activity in the United States allowing for better operational flow, getting closer to the Company's customer base and cutting fixed costs. To support this process, the Company successfully continued to obtain loans from banks in Israel and the US and has continued in improving its working capital. In connection with such plan, the Company incurred expenses of $0.5 million and capital expenditures of $0.5 million in Q1 2021.

As part of the consolidation of certain of the Company's operations in the US, the Company secured grants and incentives from the State of Oklahoma in an amount of approximately $11 million (subject to the terms of such grants) which will be utilized to finance investments and employee-related expenses of the Company's operations in Oklahoma.

Mr. Igal Zamir, TAT's CEO and President commented on the results: "In Q1 we increased our revenues and gross margin, improved our working capital and stabled the Company's operational cash flow. In Q1 of 2021 we already started enjoying the fruits of our strategic lease deal with Honeywell that was signed at the end of 2020 as well as a PPP loan forgiveness of $1.44 million. We continue with the plan to streamline our operations and expect our cost structure to improve by 2022."

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,

2021


2020


(unaudited)


(audited)

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$ 21,709


$ 24,128

Accounts receivable, net

12,862


11,355

Inventory, net

40,406


41,223

Other current assets and prepaid expenses

2,856


2,737





Total current assets

77,833


79,443





NON-CURRENT ASSETS:




Restricted deposit

320


176

Investment in affiliates

759


771

Funds in respect of employee rights upon retirement

1,133


1,186

Deferred income taxes

702


566

Intangible assets, net

1,716


1,475

Property, plant and equipment, net

25,959


25,737

Operating lease right of use assets

6,461


6,767





Total non-current assets

37,050


36,678

Total assets

$ 114,883


$ 116,121





LIABILITIES AND EQUITY








CURRENT LIABILITIES:




Current maturities of long-term loans

$ 773


$ 1,477

Credit line from bank

6,012


3,000

Accounts payable

5,998


12,222

Accrued expenses

7,247


6,691

Operating lease liabilities

1,589


1,614

Provision for restructuring plan

470


-

Liabilities belong to discontinued operation

43


179





Total current liabilities

22,132


25,183





NON CURRENT LIABILITIES:




Long-term loans

5,625


3,489

Liability in respect of employee rights upon retirement

1,283


1,410

Operating lease liabilities

5,092


5,758





Total non-current liabilities

12,000


10,657

Total liabilities

34,132


$ 35,840





EQUITY:




Share capital

2,809


2,809

Additional paid-in capital

65,737


65,711

Treasury stock at cost

(2,088)


(2,088)

Accumulated other comprehensive income (loss)

(15)


128

Retained earnings

14,308


13,721

Total shareholders' equity

80,751


80,281





Total liabilities and shareholders' equity

$ 114,883


$ 116,121

*Reclassified due to discontinued operation.




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,


2021


2020(*)


2020


(Unaudited)


(Unaudited)


(Audited)







Revenues:






Products

$ 4,154


$ 7,257


$ 22,739

Services

14,206


17,393


52,620


18,360


24,650


75,359







Cost of goods:






Products

3,610


5,794


20,751

Services

11,352


14,273


46,173


14,962


20,067


66,924

Gross Profit

3,398


4,583


8,435







Operating expenses:






Research and development, net

136


37


185

Selling and marketing

1,205


1,157


4,369

General and administrative

1,622


2,048


7,612

Restructuring and other expenses

520


-


315


3,483


3,242


12,481







Operating income (loss)

(85)


1,341


(4,046)







Financial income (expenses), net

397


160


(770)







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

312


1,501


(4,816)







Taxes on income (tax benefit)

(131)


642


(1,517)







Income (loss) before equity
investment

443


859


(3,299)







Share in results of affiliated
companies

(12)


(98)


(185)

Net income (loss) from continued
operation

$ 431


$ 761


$ (3,484)

Net profit (loss) from discontinued
operation

156


(315)


$ (1,845)

Net income (loss)

$ 587


$ 446


$ (5,329)







Basic and diluted income per share












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

$ 0.05


$ 0.09


$ (0.39)

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

$ 0.02


$ (0.04)


$ (0.21)

Net income (loss) per share basic
and diluted

$ 0.07


$ 0.05


$ (0.6)







Weighted average number of shares
outstanding






Basic

8,874,696


8,874,696


8,874,696

Diluted

8,874,696


8,874,696


8,874,696







*Reclassified due to discontinued operation.

TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)


Three months ended


Year ended


March 31,


December 31,


2021


2020


2020


(Unaudited)


(Unaudited)


(Audited)







Net income

$ 587


$ 446


$ (5,329)

Other comprehensive income (loss)






Net unrealized incomes (losses) from derivatives

(143)


(108)


232

Reclassification adjustments for gains included in net
income and inventory

-


5


(130)

Total other comprehensive income

$ 444


$ 343


$ (5,227)







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, 2018


9,122,501


$ 2,802


$ 65,535


$ (206)


$ (2,088)


$ 18,244


$ 84,294


CHANGES DURING THE YEAR ENDED
DECEMBER 31, 2019:
















Comprehensive income (loss)


-


-


-


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


CHANGES DURING THE YEAR ENDED
DECEMBER 31, 2020:
















Comprehensive income


-


-


-


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 MARCH
31, 2021 (unaudited):
















Comprehensive income (loss)


-


-


-


(143)


-


587


444


Share based compensation


-


-


26


-


-


-


26


BALANCE AT MARCH 31, 2021 (unaudited)


9,149,169


$ 2,809


$ 65,737


$ (15)


$ (2,088)


14,308


$ 80,751





















TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)



Three months ended


Year ended




March 31,


December 31,




2021


2020


2020




(Unaudited)


(Unaudited)


(audited)










CASH FLOWS FROM OPERATING ACTIVITIES:








Net income (loss)


$ 587


$ 446


$ (5,329)


Net income (loss) from continued operations


431


761


(3,484)


Adjustments to reconcile net income to net cash provided by
operating activities:
















Depreciation and amortization


1,056


1,035


4,065


Loss (gain) from change in fair value of derivatives


(9)


109


(34)


Provision for doubtful accounts


-


205


(8)


Share in results of affiliated Company


12


98


185


Share based compensation


26


40


138


Non cash finance expense


(397)


(229)


566


Provision for restructuring expenses


533


-


-


Liability in respect of employee rights upon retirement


(127)


(128)


(341)


Impairment of intangible assets


-


-


298


Deferred income taxes, net


(136)


312


(1,438)


Government loan forgiveness


(1,443)


-


-


Changes in operating assets and liabilities:








Decrease (increase) in trade accounts receivable


(1,573)


267


9,472


Decrease (increase) in other current assets and prepaid
expenses


(181)


710


310


Decrease (increase) in inventory


798


(470)


1,868


Decrease in trade accounts payable


(106)


(3,212)


(5,336)


Increase (decrease) in accrued expenses


560


1,778


(252)


Decrease in other long-term liabilities


(27)


(13)


(62)


Net cash provided by (used in) operating activities


$ (583)


$ 1,263


$ 5,947










CASH FLOWS FROM INVESTING ACTIVITIES:








Investment in affiliated company


-


-


-


Purchase of property and equipment


(7,605)


-


(3,894)


Purchase of intangible assets


(285)


(898)


(1,513)


Cash flows used in investing activities


$ (7,890)


$ (898)


$ (5,407)










CASH FLOWS FROM FINANCING ACTIVITIES:








Short-term credit received from banks


3,000


-


3,960


Proceeds from long-term loans received


3,042


-


3,692


Cash flows provided by financing activities


$6,042


$ -


$ 7,652










CASH FLOWS FROM DISCONTINUED ACTIVITIES:








Net profit (loss) from discontinued operation


156


(315)


(1,845)


Net cash provided by operating activities


-


366


1,998


Net cash provided by (used in) discontinued activities


156


51


153










Net increase (decrease) in cash and cash equivalents


(2,275)


416


8,345










Cash and cash equivalents at beginning of period


24,304


15,959


15,959










Cash and cash equivalents at end of period


$ 22,029


$ 16,375


$ 24,304


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,



2021


2020


2020
















Net income

$ 587


$ 446


$ (5,329)


Adjustments:







Share in results and sale of equity
investment of affiliated companies

12


98


185


Taxes on income (tax benefit)

(131)


642


(1,517)


Financial (income) expenses, net

(397)


(160)


770


Depreciation and amortization

1,105


1,103


4,219


Provision for restructuring expenses

533


-


-


Exit and disposal activities

-


-


805


Discontinued operation (income) loss

(156)


315


1,845


Share based compensation

26


40


138


Adjusted EBITDA

$ 1,579


$ 2,484


$ 1,116









Cision
Cision

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SOURCE TAT Technologies Ltd