TAT Technologies Reports First Quarter 2023 Results

News provided by 31 May, 2023, 03:41 ET Share this article NETANIA, Israel, May

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31 May, 2023, 03:41 ET

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NETANIA, Israel, May 31, 2023 /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, 2023.

Financial highlights for the first quarter of 2023:

Mr. Igal Zamir, TAT's CEO and President commented on the results: "We are excited with the results of the first quarter of 2023. As our industry continues to ramp up, it is the second consecutive quarter that we continue to increase our revenues, improve gross profits, and improve EBITDA and net income. Cash flow from operations continues to be positively strong. The world's supply chain challenges continue to negatively affect our results and customer satisfaction. As of the end of March 2023 our past due customers' orders amount to $33 million.

Our order backlog and LTA continue to grow as the demand for our products and services rapidly increases and as we enter the second half of the year, we expect to see the fruits of the strategic deals that we signed with Honeywell both for the APU 331-500 and APU 131. These strategic deals represent a major growth engine and are expected to yield a much better profitability."

Mr. Zamir continued: "We are optimistic with the coming quarters of 2023 and expect substantial growth in revenues and EBITDA compared to 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-YairChief Financial OfficerTel: 972-8-862-8503[email protected]

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,

2023

2022

(unaudited)

(audited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$ 9,196

$ 7,722

Accounts receivable, net

17,643

15,622

Inventory, net

42,848

45,759

Other current assets and prepaid expenses

4,912

6,047

Total current assets

74,599

75,150

NON-CURRENT ASSETS:

Restricted deposit

302

304

Investment in affiliates

1,733

1,665

Funds in respect of employee rights upon retirement

710

780

Deferred income taxes

1,207

1,229

Intangible assets, net

1,722

1,623

Property, plant and equipment, net

42,560

43,423

Operating lease right of use assets

2,257

2,477

Total non-current assets

50,491

51,501

Total assets

$ 125,090

$ 126,651

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Current maturities of long-term loans

$ 1,975

$ 1,876

Credit line from bank

6,112

6,101

Accounts payable

9,112

10,233

Accrued expenses

9,395

9,686

Operating lease liabilities

866

904

Provision for restructuring plan

132

190

Total current liabilities

27,592

28,990

NON CURRENT LIABILITIES:

Long-term loans

18,764

19,408

Liability in respect of employee rights upon retirement

1,069

1,148

Operating lease liabilities

1,347

1,535

Total non-current liabilities

21,180

22,091

Total liabilities

$ 48,772

51,081

EQUITY:

Share capital

2,842

Additional paid-in capital

66,335

66,245

Treasury stock at cost

(2,088)

Accumulated other comprehensive income

(26)

Retained earnings

9,255

8,597

Total shareholders' equity

76,318

75,570

Total liabilities and shareholders' equity

$ 125,090

$ 126,651

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,

2023

2022

(Unaudited)

(Audited)

Revenues:

Products

$ 7,291

$ 6,319

$ 25,460

Services

17,926

13,635

59,096

25,217

19,954

84,556

Cost of goods:

Products

6,274

5,744

21,631

Services

14,685

11,165

46,997

20,959

16,909

68,628

Gross Profit

4,258

3,045

15,928

Operating expenses:

Research and development, net

(27)

479

Selling and marketing

1,159

1,335

5,629

General and administrative

2,459

2,385

9,970

Other income

(406)

(81)

(90)

Restructuring and other expenses

927

1,715

3,311

4,539

17,703

Operating income (loss)

948

(1,494)

(1,775)

Interest expenses

(366)

(104)

(902)

Other financial income (expenses), net

(19)

170

1,029

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

563

(1,428)

(1,648)

Taxes on income (tax benefit)

(27)

107

Income (loss) before share of equity investment

590

(1,535)

(1,746)

Share in results of affiliated companies

(27)

184

Net income (loss) from continued operation

$ 658

$ (1,562)

Net income from discontinued operation

Net income (loss)

$ 658

$ (1,562)

Basic and diluted income per share

Net income (loss) per share basic and diluted

$ 0.074

$ (0.17)

$ (0.175)

Weighted average number of shares outstanding :

Basic and Diluted

8,911,546

8,886,546

8,911,546

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three months ended

Year ended

March 31,

December 31,

2023

2022

(Unaudited)

(Audited)

Net income (loss)

$ 658

$ (1,562)

Other comprehensive income (loss)

Net unrealized losses from derivatives

(32)

(89)

Reclassification adjustments for gains included in net income and inventory

Total comprehensive income (loss)

$ 658

$ (1,594)

$ (1,621)

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

Share capital

Number of shares issued

Amount

Additional paid-in capital

Accumulated other comprehensive income (loss)

Treasury shares

Retained earnings

Total equity

BALANCE AT DECEMBER 31, 2010

9,149,169

$ 2,809

$ 65,711

$ 128

$ (2,088)

$ 13,329

$80,281

CHANGES DURING THE YEAR ENDED DECEMBER 31, 2021:

Comprehensive loss

(95)

(3,562)

(3,657)

Share based compensation

160

BALANCE AT DECEMBER 31, 2021

9,149,169

$ 2,809

$ 65,871

$ 33

$ (2,088)

$ 10,159

$76,784

CHANGES DURING THE YEAR ENDED DECEMBER 31, 2022:

Comprehensive loss

(59)

(1,562)

(1,621)

Exercise of option

36,850

156

189

Share based compensation

218

BALANCE AT DECEMBER 31, 2022

9,186,019

$ 2,842

$ 66,245

$ (26)

$ (2,088)

$ 8,597

$75,570

CHANGES DURING THE PERIOD ENDED MARCH 31, 2023 (unaudited):

Comprehensive profit

658

Exercise of option

Share based compensation

BALANCE AT MARCH 31, 2023 (unaudited)

9,186,019

$ 2,842

$ 66,335

$ (26)

$ (2,088)

9,255

$76,318

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Three months ended

Year ended

March 31,

December 31,

2023

2022

(Unaudited)

(audited)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) from continued operations

658

(1,562)

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

Depreciation and amortization

1,041

973

3,706

Loss (gain) from change in fair value of derivatives

Provision for doubtful accounts

(3)

138

Share in results of affiliated Company

(68)

(184)

Share based compensation

218

Noncash finance expense

(6)

(35)

Lease modification

(82)

Increase (decrease) in provision for restructuring expenses

(58)

(345)

(467)

Liability in respect of employee rights upon retirement

(79)

(117)

(356)

Capital gain from sale of fixed assets

(456)

(81)

(90)

Deferred income taxes, net

107

Changes in operating assets and liabilities:

Increase in trade accounts receivable

(2,012)

(895)

(2,659)

Decrease (increase) in other current assets and prepaid expenses

1,205

(62)

(1,459)

Decrease (increase) in inventory

2,959

(2,222)

(5,069)

Decrease (increase) in trade accounts payable

(1,121)

536

1,143

Increase (decrease) in accrued expenses

(290)

2,727

Decrease in other long-term liabilities

(115)

(161)

(902)

Net cash provided by (used in) operating activities

$ 1,767

$ (3,729)

$ (4,867)

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of property and equipment

1,560

Purchase of property and equipment

(1,433)

(4,010)

(16,213)

Purchase of intangible assets

Cash flows provided by (used in) investing activities

$ 127

$ (3,926)

$ (16,120)

CASH FLOWS FROM FINANCING ACTIVITIES:

Short-term credit received (Repayments) from banks

(3,000)

(1,071)

Proceeds (repayments) from long-term loans received

(422)

10,504

16,680

Exercise of options

189

Cash flows provided by (used in) financing activities

$ (422)

$ 7,571

$ 15,798

Net increase (decrease) in cash and cash equivalents and restricted cash

1,472

(84)

(5,189)

Cash and cash equivalents and restricted cash at beginning of period

8,026

13,215

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

$ 9,498

$ 13,131

8,026

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,

2023

2022

Net income (Loss)

$ 658

$ (1,562)

Adjustments:

Share in results and sale of equity investment of affiliated companies

(68)

(184)

Taxes on income (tax benefit)

(27)

107

Financial expense/ (income), net

385

(66)

(127)

Depreciation and amortization

1,041

1,025

3,878

Restructuring expenses

927

1,715

Share based compensation

218

Adjusted EBITDA

$ 2,079

$ 507

$ 4,036

SOURCE TAT Technologies Ltd.

TAT Technologies Ltd.

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