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OFFON

TAT TECHNOLOGIES LTD.

(TATT)
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TAT Technologies : Reports Second Quarter 2021 Results

08/05/2021 | 08:56am EST

GEDERA, Israel, Aug. 5, 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 and six month periods ended June 30, 2021.

Key Financial Highlights:

  • Revenues for Q2 2021 were $21.6 million, an increase of 24% compared with $17.4 million in Q2 2020. Revenues for the six-month period that ended on June 30, 2021 were $39.9 million compared with $42 million in the six-month period that ended on June 30, 2020.
  • Gross profit for Q2 2021 was $3.2 million (14.6% as a percentage of revenues) an increase of 214% compared with $1.5 million (8.7% as a percentage of revenues) in Q2 2020.  Gross profit for the six-month period that ended on June 30, 2021 was $6.6 million (16.4% as a percentage of revenues) an increase of 8% compared with $6.1 million (14.5% as a percentage of revenues) in the six-month period that ended on June 30, 2020.
  • Adjusted EBITDA for Q2 2021 was 0.4 million compared with $0.0 million in Q2 2020. Adjusted EBITDA for the six-month period that ended on June 30, 2021 was $2.0 million compared with $2.5 million in the six-month period that ended on June 30, 2020.
  • Net loss was ($2.5) million, or loss of ($0.3) per diluted share in Q2 2021 compared with a net loss of ($2.2) million, or loss of ($0.3) per diluted share in Q2 2020. For the period of H1 2021, net loss was ($1.9) million, or loss of ($0.2) per diluted share compared with a net loss of ($1.8) million, or $0.2 per diluted share in H1 2020. Net loss for Q2 2021 and for the six-month period that ended on June 30, 2021 include restructuring expenses of $1.9 million and $2.4 million, respectively.

Mr. Igal Zamir, TAT's CEO and President commented on the results: "As the commercial aviation industry continues to emerge from the deep crisis and the major slow-down during 2020, we see sequential recovery in the volumes of our MRO activities and related revenues. This trend started  in Q1 2021 resulting in improvement in our gross margin and operational cash flow.

"During Q2 2021, we signed a third strategic agreement (following the two agreements that were announced in January 2021 and September 2020) with Honeywell for the repair and lease of the APU 131 engines, the most common of Honeywell's APU series. This deal opens a much larger market that we were not exposed to in the past. We believe that due to the execution of the new strategic agreement with Honeywell (together with the two agreements with Honeywell previously announced), the Company's addressable market size in the MRO segment is expected to grow in a substantial manner, and therefore opens the door to the Company for potentially significant revenue growth in the MRO segment. In first half of 2021 we already started enjoying the fruits of our strategic lease deal with Honeywell for the rental of APU 331-500 which was announced in January 2021. We continue with the plan to streamline our operations and expect our cost structure to improve by 2022.

"We strongly believe that the three strategic agreements with Honeywell coupled with the operations rationalization scheme will position TAT as a strong player in its lines of business with the expected recovery of the commercial aviation industry." 

The Company is proceeding with its recently announced plan to improve its cost structure and operational efficiency, and in that respect has begun executing on its plan to consolidate the Company's operations from four to three production sites by consolidating its production sites in Israel and transferring additional production operations to the Company's production site in 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. In connection with such plan, the Company incurred restructuring expenses of $2.4 million and capital expenditures of $1.5 million in H1 2021.

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, discontinued operation, financial (expenses) income, net, 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)


June 30,


December 31,

2021


2020


(unaudited)


(audited)

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$                   18,645


$                   24,128

Accounts receivable, net

14,942


11,355

Inventory, net

39,749


41,223

Other current assets and prepaid expenses

4,116


2,737





Total current assets

77,452


79,443





NON-CURRENT ASSETS:
   Restricted deposit

327


176

 Investment in affiliates

733


771

Funds in respect of employee rights upon retirement

1,102


1,186

 Deferred income taxes

846


566

Intangible assets, net

1,922


1,475

Property, plant and equipment, net

26,152


25,737

Operating lease right of use assets

5,230


6,767





Total non-current assets

36,312


36,678


Total assets

$                 113,764


$                 116,121





 

LIABILITIES AND EQUITY








CURRENT LIABILITIES:




Current maturities of long-term loans

1,114


1,477

Credit line from bank

6,013


3,000

Accounts payable

7,352


12,222

Accrued expenses                                 

6,995


6,691

Operating lease liabilities

1,617


1,614

Provision for restructuring plan

470


-

Liabilities belong to discontinued operation

11


179





Total current liabilities

23,572


25,183





NON CURRENT LIABILITIES:




   Long-term loans

5,376


3,489

Liability in respect of employee rights upon retirement

1,420


1,410

Operating lease liabilities

5,081


5,758





 Total non-current liabilities

11,877


10,657





 

Total liabilities

$                35,449


$                  35,840





EQUITY:




Share capital

2,809


2,809

Additional paid-in capital

65,769


65,711

Treasury stock at cost

(2,088)


(2,088)

Accumulated other comprehensive income

-


128

Retained earnings

11,825


13,721

Total shareholders' equity

78,315


80,281





Total liabilities and shareholders' equity

$                 113,764


$                 116,121





 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share and per share data)






Three months ended


Six months ended


Year ended


June 30,


December 31,


2021


2020


2021


2020


2020


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Audited)











Revenues:










Products

$      8,801


$      6,078


$    12,954


$    13,335


$     22,739

Services

12,784


11,280


26,991


28,672


52,620


21,585


17,358


39,945


42,007


75,359











Cost of goods:










Products

7,527


5,980


11,138


11,773


20,751

Services

10,905


9,871


22,257


24,143


46,173


18,432


15,851


33,395


35,916


66,924

Gross Profit

3,153


1,507


6,550


6,091


8,435











Operating expenses:










Research and development, net

136


33


271


70


185

Selling and marketing

1,458


980


2,663


2,057


4,369

General and administrative

2,309


1,586


3,932


3,713


7,612

Restructuring and other expenses

1,897


21


2,417


21


315


5,800

 


2,620


9,283


5,861


12,481

Operating income (loss)

(2,647)


(1,113)


(2,733)


230


(4,046)











Financial income (expenses), net

(257)


(234)


140


(74)


(770)

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

(2,904)


(1,347)


(2,593)


156


(4,816)











Taxes on income (tax benefit)

(140)


(510)


(272)


156


(1,517)











Loss before equity investment

(2,764)


(837)


(2,321)


-


(3,299)











Share in results of affiliated companies

(26)


(17)


(38)


(115)


(185)











Net loss from continued operation

$     (2,790)


$     (854)


$      (2,359)


$     (115)


$      (3,484)

 

Net profit (loss) from discontinued operation

$   307


$   (1,388)


$   463


 

$    (1,686)


$    (1,845)











Net loss

$  (2,483)


$     (2,242)


$   (1,896)


$    (1,801)


$        (5,329)











Basic and diluted income (loss) per share




















Net loss per sharebasic and diluted from 
     continued operation

$      (0.31)


$      (0.1)


$    (0.26)


$      (0.01)


$    (0.39)

Net income (loss) per sharebasic and diluted
     from discontinued

$    0.03


$   (0.16)


$    0.05


$   (0.19)


$    (0.21)

Net loss per share basic and diluted

$    (0.28)


$     (0.26)


$   (0.21)


$   (0.2)


$      (0.6)











Weighted average number of shares outstanding










Basic

8,874,696


8,874,696


8,874,696


8,874,696


8,874,696

Diluted

8,874,696


8,874,696


8,874,696


8,874,696


8,874,696











 

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)



Three months ended


Six months ended


Year ended 


June 30,


December 31,


2021


2020


2021


2020


2020


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Audited)





















Net loss

$    (2,483)


$    (2,242)


$     (1,896)


$     (1,801)


$      (5,329)

Other comprehensive income










Net unrealized income from derivatives

15


129


(128)


21


232

        Reclassification adjustments for gains (losses) 
             included in net income and inventory

-


-


-


5


(130)

    Total other comprehensive loss

$    (2,468)


$    (2,113)


$     (2,024)


$     (1,775)


$      (5,227)

 

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)





TAT Technologies Ltd. Shareholders






















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


-


-


-


232


-


806


1,038


Share based compensation expenses


-


-


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 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 JUNE 30, 2021 (unaudited):
















Comprehensive loss


-


-


-


(128)


-


(1,896)


(2,024)


 Share based compensation


-


-


58


-


-


-


58


BALANCE AT JUNE 30, 2021 (unaudited)


9,149,169


$           2,809


$      65,769


$             0


$           (2,088)


$          11,825


$           78,315





















 

 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)










Three months ended


Six months ended


Year ended



June 30,


December 31,



2021


2020


2021

2020


2020



(Unaudited)


(Unaudited)


(Unaudited)

(Unaudited)


(Audited)

CASH FLOWS FROM OPERATING ACTIVITIES:










Net loss


$   (2,483)


$   (2,242)


$   (1,896)

$   (1,801)


$      (5,329)

Net loss from continued operations


(2,790)


(854)


(2,359)

(115)


(3,484)

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




















Depreciation and amortization


1,081


1,030


2,137

2,028


4,065

Loss (gain) from change in fair value of derivatives


(6)


(88)


(15)

21


(34)

Provision for doubtful accounts


42


1


42

206


(8)

Share in results of equity investment of affiliated Company 


26


17


38

115


185

Share based compensation


32


37


58

77


138

Non cash finance expense


119


188


(394)

(49)


566

Provision for restructuring expenses


(63)


-


470

-


-

Liability in respect of employee rights upon retirement


137


(13)


10

(141)


(341)

Impairment of intangible assets


-


-


-

-


298

Impairment of fixed assets


1,800


-


1,800

-


-

Deferred income taxes, net


(144)


(369)


(280)

(57)


(1,438)

Government loan forgiveness


-


1,059


(1,443)

1,059


-

Changes in operating assets and liabilities:










    Decrease (increase) in trade accounts receivable


(1,900)


6,332


(3,473)

6,242


9,472

   Decrease (increase) in other current assets and prepaid 
     expenses


(1,202)


(641)


(1,383)

69


310

Decrease (increase) in inventory


651


1,653


1,449

1,372


1,868

    Increase (decrease) in trade accounts payable


1,484


(178)


1,494

(3,220)


(5,336)

    Increase (decrease) in accrued expenses


(256)


(1,862)


304

(85)


(252)

    Decrease in other long-term liabilities


90


(49)


63

(62)


(62)

Net cash provided by operating activities


$  (899)


$  6,263


$  (1,482)

$  7,460


$      5,947

CASH FLOWS FROM INVESTING ACTIVITIES:










Purchase of property and equipment


(1,962)


(883)


(9,567)

(1,781)


(3,894)

Purchase of intangible assets


(259)


-


(544)

-


(1,513)

Cash flows used in investing activities


$  (2,221)


$  (883)


$ (10,111)

$  (1,781)


$    (5,407)

 

CASH FLOWS FROM FINANCING ACTIVITIES:










  Short-term credit received from banks


-


-


3,000

-


3,960

  Proceeds from long-term loans received


-


4,834


3,042

4,834


3,692

Cash flows provided by financing activities


$  -


$  4,834


$ 6,042

$ 4,834


$    7,652

 

Cash flows from discontinued operations:

Net profit (loss) from discontinued operation


$ 307


$ (1,388)


$ 463

$ (1,686)


$    (1,845)

Net cash provided by operating activities


(244)


998


(244)

1,413


1,998

Net cash provided by (used in) discontinued activities


$    63


$    (390)


$    219

$    (273)


$   153











Net increase (decrease) in cash and restricted cash


(3,057)


9,824


(5,332)

10,240


8,345

Cash and restricted cash at beginning of period


22,029


16,375


24,304

15,959


15,959

Cash and restricted cash at end of period


$   18,972


$   26,199


$   18,972

$   26,199


$     24,304



 

 

TAT TECHNOLOGIES AND ITS SUBSIDIARIES


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

(In thousands)




Three months ended

Six months ended

Year ended


June 30,

June 30,

December 31,


2021


2020

2021

2020

2020















Net loss

$   (2,483)


$   (2,242)

$   (1,896)

$   (1,801)

$     (5,329)

Adjustments:







Share in results of equity investment of 
     affiliated companies

26


17

 

 

38

 

 

115

 

 

185

Taxes on income (tax benefit)

(140)


(510)

(272)

156

(1,517)

Financial expenses, net

257


234

(140)

74

770

Depreciation and amortization

1,158


1,089

2,265

2,124

4,219

Restructuring expenses

1,897


-

2,430

-

-

Exit and disposal activities

-


1,110

-

2,145

805

Discontinued operation (income) loss

(307)


1,388

(463)

1,686

1,845

Share based compensation

32


37

58

77

138

Adjusted EBITDA

$      440


$         34

$      2,020

$         2,452

$       1,116








 

 

Cision
View original content:https://www.prnewswire.com/news-releases/tat-technologies-reports-second-quarter-2021-results-301349388.html

SOURCE TAT Technologies Ltd.


ę PRNewswire 2021
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