TAT Technologies Reports results for the Second Quarter of 2022

NETANYA, Israel, Aug. 30, 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 and six-month periods ended June 30, 2022.

Key Financial Highlights:

  • Revenues for the six-month period that ended on June 30, 2022 increased by 2% to $40.7 million compared with $39.9 million in the six-month period that ended on June 30, 2021. Revenues for Q2 2022 were $20.8 million, a decrease of 3.7% compared with $21.6 million in Q2 2021.
  • Gross profit for Q2 2022 was $4 million (19.4% as a percentage of revenues) an increase of 27.8% compared with $3.2 million (14.6% as a percentage of revenues) in Q2 2021. Gross profit for the six-month period that ended on June 30, 2022 was $7.1 million (17.4% as a percentage of revenues) an increase of 8.1% compared with $6.6 million (16.4% as a percentage of revenues) in the six-month period that ended on June 30, 2021.
  • Adjusted EBITDA for Q2 2022 doubled to $0.9 million compared with $0.4 million in Q2 2021. Adjusted EBITDA for the six-month period that ended on June 30, 2022 was $1.4 million compared with $2.0 million in the six-month period that ended on June 30, 2021.
  • During the first six months of 2021 the company received grants (which were recorded as a decrease of expenses) in the value of $1.9M. Adjusted EBITDA excluding grants increased by $1.3M to $1.4M in the six month period that ended on June 30 2022 compared with $0.1M in the six month period that ended on June 30, 2021 (for more details see the proforma comparison below)
  • Net loss in Q222 was ($0.1) million, or loss of ($0.01) per diluted share, compared with a net loss of ($2.5) million, or loss of ($0.3) per diluted share, in Q221. For the six-month period that ended on June 30, 2022, net loss was ($1.7) million, or loss of ($0.2) per diluted share compared with a net loss of ($1.9) million, or $(0.2) per diluted share in the six-month period that ended on June 30, 2021.
  • Net loss for Q222 and for the six-months period that ended on June 30, 2022 include restructuring expenses of $0.8 million and $1.7 million, respectively.
  • Proforma results comparison, representing 2021 without grants:

Thousands USD

Q222

Q221

H122

H121

Revenues

20,775

21,585

40,730

39,945

COGS

16,743

19,847

33,652

34,990

Gross Profit

4,032

1,738

7,078

4,955

GM

19.4 %

8.1 %

17.4 %

12.4 %

R&D & SG&M

4,191

4,258

7,884

7,221

EBITDA

886

(1,330)

1,393

69

Mr. Igal Zamir, TAT’s CEO and President commented on the results: “The financial results of the second quarter of 2022 represent a continuous improvement in our results compared to the previous quarter and compared to the same period in 2021. During Q2 of 2022 we managed to increase revenues, improve our gross profit and gross margin and improve our operational cash flow compared to Q1 of 2022. Part of this improvement is a result of cost cutting measures that are part of our restructuring plan. Global supply chain issues continue to affect our business and results. We continue to make enormous efforts to meet our customers’ needs at a time when demand post the COVID-19 pandemic is picking up, but materials and components availability is still problematic”. Mr. Zamir continued: “During this quarter we signed a five-year agreement with one of the world’s largest cargo companies with expected revenues of $50 million over this period. This agreement already contributes revenues and will be part of our growth plan for Q322. We continue to work on other opportunities that may result from the strategic agreements that we signed with Honeywell last year”.

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

[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)



June 30,


December 31,

2022


2021


(unaudited)


(audited)

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$                  8,336


$      12,872

Accounts receivable, net

14,490


13,887

Inventory, net

44,220


41,003

Other current assets and prepaid expenses

4,659


4,219





Total current assets

71,705


71,981





NON-CURRENT ASSETS:

   Restricted deposit

307


343

 Investment in affiliates

1,571


695

Funds in respect of employee rights upon retirement

824


1,157

 Deferred income taxes

1,333


1,252

Intangible assets, net

1,727


1,829

Property, plant and equipment, net

35,991


30,462

Operating lease right of use assets

2,954


3,114





Total non-current assets

44,707


38,852

Total assets

$                116,412


$            110,833





LIABILITIES AND EQUITY








CURRENT LIABILITIES:




Current maturities of long-term loans

1,463


$        691

Credit line from bank

3,017


6,008

Accounts payable

8,062


9,093

Accrued expenses                                 

7,014


6,959

Operating lease liabilities

774


1,169

Provision for restructuring plan

1,114


657





Total current liabilities

21,444


24,577





NON CURRENT LIABILITIES:




   Long-term loans

16,533


5,979

Liability in respect of employee rights upon retirement

1,178


1,504

Operating lease liabilities

2,137


1,989





 Total non-current liabilities

19,848


9,472





Total liabilities

$               41,292


$        34,049





EQUITY:




Share capital

2,820


2,809

Additional paid-in capital

66,038


65,871

Treasury stock at cost

(2,088)


(2,088)

Accumulated other comprehensive income

(115)


33

Retained earnings

8,465


10,159

Total shareholders’ equity

75,120


76,784





Total liabilities and shareholders’ equity

$                116,412


$                110,833





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,


2022


2021


2022


2021


2021


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Audited)











Revenues:










Products

$    7,144


$     8,801


$   13,463


$   12,954


$   25,870

Services

13,631


12,784


27,267


26,991


52,103


20,775


21,585


40,730


39,945


77,973











Cost of goods:










Products

5,826


7,527


11,569


11,138


23,761

Services

10,917


10,905


22,083


22,257


42,942


16,743


18,432


33,652


33,395


66,703

Gross Profit

4,032


3,153


7,078


6,550


11,270











Operating expenses:










Research and development, net

180


136


153


271


517

Selling and marketing

1,517


1,458


2,852


2,663


5,147

General and administrative

2,494


2,309


4,879


3,932


8,354

Other income

(9)



(90)



(468)

Restructuring expenses

775


1,897


1,703


2,417


1,755


4,957


5,800


9,497


9,283


15,305

Operating loss

(925)


(2,647)


(2,419)


(2,733)


(4,035)











Financial income (expenses), net

508


(257)


574


140


(540)

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

(417)


(2,904)


(1,845)


(2,593)


(4,575)











Taxes on income (tax benefit)

(170)


(140)


(63)


(272)


(662)











Income (loss) before share of equity investment

(247)


(2,764)


(1,782)


(2,321)


(3,913)











Share in results of affiliated companies

115


(26)


88


(38)


(76)











Net income (loss) from continued operation

$      (132)


$     (2,790)


$      (1,694)


$     (2,359)


$     (3,989)

Net income from discontinued operation


$   307



$   463


$   427











Net loss

$   (132)


$  (2,483)


$   (1,694)


$   (1,896)


$       (3,562)











Basic and diluted income per share




















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

$      (0. 01)


$      (0.31)


$    (0.19)


$    (0.26)


$    (0.45)

Net income per share basic and diluted from discontinued

$    –


$    0.03


$    –


$    0.05


$  0.05

Net income (loss) per share basic and diluted

$    (0.01)


$    (0.28)


$   (0.19)


$   (0.21)


$      (0.4)











Weighted average number of shares outstanding










Basic

8,886,546


8,874,696


8,886,546


8,874,696


8,874,696

Diluted

8,886,546


8,874,696


8,886,546


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,


2022


2021


2022


2021


2021


(Unaudited) 


(Unaudited) 


(Unaudited) 


(Unaudited)


(Audited)











Net loss

$    (132)


$     (2,483)


$     (1,694)


$     (1,896)


$     (3,562)

Other comprehensive income










Net unrealized income from derivatives

(116)


15


(148)


(128)


(76)

       Reclassification adjustments for gains (losses)

          included in net income and inventory





(19)

       Total comprehensive income (loss)

$     (248)


$    (2,468)


$     (1,842)


$    (2,024)


$     (3,657)




























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, 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 JUNE

30, 2022 (unaudited):
















Comprehensive loss





(148)



(1,694)


(1,842)


Exercise of option


11,850


11


56





67


Share based compensation




111





111


BALANCE AT JUNE 30, 2022 (unaudited)


9,161,019


$            2,820


$       66,038


$            (115)


$            (2,088)


8,465


$            75,120


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,




2022


2021


2022

2021


2021




(Unaudited)


(Unaudited)


(Unaudited)

(Unaudited)


(Audited)


CASH FLOWS FROM OPERATING ACTIVITIES:











Net income (loss)


$  (132)


$  (2,790)


$  (1,694)

$  (2,359)


$     (3,989)


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






















Depreciation and amortization


926


1,081


1,899

2,137


4,881


Loss (gain) from change in fair value of derivatives


(9)


(6)


8

(15)


(19)


Provision for doubtful accounts


(45)


42


(45)

42


248


Share in results of equity investment of affiliated Company 


(115)


26


(88)

38


76


Share based compensation


62


32


111

58


160


Non cash finance (income) expense


(777)


209


(972)

(331)


(65)


Lease modification





(1,315)


Increase (decrease) in provision for restructuring expenses


802


(63)


457

470


657


Liability in respect of employee rights upon retirement


(209)


137


(326)

10


94


Impairment of fixed assets



1,800


1,800


1,820


Capital gain from sale of fixed assets


(9)



(90)



(468)


Deferred income taxes, net


(188)


(144)


(81)

(280)


(686)


Government loan forgiveness




(1,443)


(1,442)


Changes in operating assets and liabilities:











    Decrease (increase) in trade accounts receivable


(451)


(1,900)


(1,346)

(3,473)


(2,934)


   Decrease (increase) in other current assets and prepaid expenses


(81)


(1,202)


(60)

(1,383)


(959)


Decrease (increase) in inventory


(1,143)


651


(3,365)

1,449


(681)


    Increase (decrease) in trade accounts payable


(1,428)


1,484


(892)

1,494


2,571


    Increase (decrease) in accrued expenses


161


(256)


119

304


(218)


Net cash provided by operating activities


$ (2,636)


$ (899)


$ (6,365)

$ (1,482)


$     (2,269)


CASH FLOWS FROM INVESTING ACTIVITIES:











Proceeds from sale of property and equipment


9



93


1,163


Purchase of property and equipment


(3,575)


(1,962)


(7,585)

(9,567)


(16,247)


Purchase of intangible assets



(259)


(544)


(555)


Cash flows used in investing activities


$ (3,566)


$ (2,221)


$(7,492)

$(10,111)


$   (15,639)


CASH FLOWS FROM FINANCING ACTIVITIES:











  Loans and credit line received (repayment) from banks


(261)



(3,261)

3,000


3,000


  Proceeds from long-term loans received


1,976



12,480

3,042


3,042


   Exercise of options




67



Cash flows provided by financing activities


$ 1,715


$ –


$9,286

$6,042


$       6,042


Cash flows from discontinued Activities:

Net profit (loss) from discontinued operation


$-


$63


$-

$219


$   777


Net cash provided by (used in) discontinued activities


$    –


$   63


$   –

$   219


$  777













Net increase (decrease) in cash and restricted cash


(4,487)


(3,057)


(4,571)

(5,332)


(11,089)


Cash and restricted cash at beginning of period


13,131


22,029


13,215

24,304


24,304


Cash and restricted cash at end of period


$  8,644


$  18,972


$  8,644

$  18,972


$    13,215


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,


2022


2021

2022

2021

2021















Net loss

$  (132)


$   (2,483)

$  (1,694)

$  (1,896)

$    (3,562)

Adjustments:







Share in results of equity investment of affiliated companies

(115)


26

(88)

38

76

Taxes on income (tax benefit)

(170)


(140)

(63)

(272)

(662)

Financial expenses (income), net

(508)


257

(574)

(140)

540

Depreciation and amortization

974


1,158

1,998

2,265

5,420

Restructuring expenses

775


1,897

1,703

2,430

1,755

Discontinued operation income


(307)

(463)

(427)

Share based compensation

62


32

111

58

160

Adjusted EBITDA

$     886


$     440

$     1,393

$       2,020

$      3,300








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