TAT Technologies Reports Full Year 2022 Results

NETANYA, Israel, March 29, 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 audited results for the twelve months ended December 31, 2022.

Key Financial Highlights:

  • Total revenues for the twelve months ended December 31, 2022, were $84.6 million compared to $78 million for the twelve months ended December 31, 2021, an increase of 8.4%.
  • Gross profit for the twelve months ended December 31, 2022, were $15.9 million (18.8% of revenues) compared to $11.3 million (14.5% of revenues) for the twelve months ended December 31, 2021, an increase of 41%.
  • Adjusted EBITDA for the twelve months ended December 31, 2022, was $4 million compared to $3.3 million for the twelve months ended December 31, 2021, an increase of 21%.
  • GAAP net loss from continued operations for the twelve months ended December 31, 2022, was $1.6 million (net profit of $0.1 million without a onetime impact of our restructuring plan) compared to GAAP net loss from continued operations of $4 ($2.2 million without a onetime impact of our restructuring plan) million for the twelve months ended December 31, 2021. A decrease of 60% in net loss.
  • Net debt for December 31, 2022, was $19.4 million compared to net debt of $0.5 million for December 31, 2021. During the years 2021 and 2022, the Company made significant capital investments related to large strategic agreements and the restructuring plan.
  • During 2021 and 2022 the company recorded a reduction of expenses due to ERC grants in the amount of $3.6Millions and $1.2Millions respectively.
  • During the years 2021 and 2022 the company recorded restructuring expenses in the amount of $1.7M for each of the years.
  •   Proforma results comparison, representing 2021 and 2022 without grants and restructuring cost: 

Thousands USD

YTD 22

YTD 21

YTD 20

Revenues

84,556

77,973

75,359

COGS

69,582

69,550

68,274

Gross Profit

14,974

8,423

7,085

GM

17.7 %

10.8 %

9.4 %

R&D & SG&M

16,236

14,524

12,831

EBITDA

2,832

(461)

(2,816)

Mr. Igal Zamir, CEO and President of TAT Technologies stated that 2022 was a unique year for TAT and the aviation industry. Throughout the year, we suffered from the impact of COVID and the war in Ukraine on our supply chain, resulting in lack of substantial parts, material availability and costs increases. We worked closely with our customer to assist them with the ramp up while overcoming the challenges. We completed the transition of the heat exchange activity from Israel to the US and merged our two facilities in Israel into one new modern facility. In the second half of the year, we saw swift change and a large increase in orders both for the MRO and OEM. During the second half of the year, we secured several strategic contracts with some of the leading companies in the industry which led to an increase in the expected value of our long term agreements by $130 million. As a result, we saw an increase in MRO revenues and profitability and ended 2022 with expected total value of long-term commercial agreement and backlog of $400 million– almost double compared to 2021. We enter 2023 with very strong order backlog and expect to present improved results for the full year. During 2023 we will benefit from our new line of business that includes MRO for APU331-500 and APU131-9A/B as well as MRO for the Gulfstream Landing gear platforms of G4 and G5.

Non-GAAP Financial Measures

To supplement the consolidated financial statements presented in accordance with GAAP, the Company also presents a Non-GAAP presentation of Net Income and 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.  Non-GAAP Net Income excludes changes, income or losses, as applicable, related to one or more of the following: (1) share-based compensation expenses and/or (2) certain tax impact and/or (3) acquisition related expenses and/or (4) share in results of equity investment of affiliated companies. Adjusted EBITDA is calculated as net income before the Company’s share in results and sale of equity investment of affiliated companies, share-based compensation, taxes on income, financial (expenses) income, net, depreciation and amortization, inventory impairment from exit and dismissal activity and customers relationship write off. Non-GAAP Net Income and Adjusted EBITDA, however, should not be considered as alternatives to net income and operating income for the period and may not be indicative of the historic operating results of the Company; nor they are meant to be predictive of potential future results.  Non-GAAP Net Income and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles and may not be comparable to other similarly titled measures for other companies. See reconciliation of GAAP Net Income to Non-GAAP Net Income and Adjusted EBITDA in page 11.

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 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 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.

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(In thousands)










2022


2021







ASSETS












CURRENT ASSETS:






   Cash and cash equivalents



$       7,722


$       12,872

   Accounts receivable, net of allowance for credit losses of $527

   and $389 thousand as of December 31, 2022 and December 31,

   2021 respectively



15,622


13,887

   Other current assets and prepaid expenses



6,047


4,219

   Inventory, net



45,759


41,003







   Total current assets



75,150


71,981







NON-CURRENT ASSETS:






   Restricted deposit



304


343

   Investment in affiliates



1,665


695

   Funds in respect of employee rights upon retirement



780


1,157

   Deferred income taxes



1,229


1,252

Property, plant and equipment, net



43,423


30,462

Operating lease right of use assets



2,477


3,114

Intangible assets, net



1,623


1,829

    Total non-current assets



 

51,501


 

38,852







   Total assets



$     126,651


$     110,833

The accompanying notes are an integral part of the consolidated financial statements.




December 31,





2022


2021
















LIABILITIES AND EQUITY














CURRENT LIABILITIES:







  Current maturities of long-term loans



$     1,876


$       691


  Credit line from bank



6,101


6,008


   Accounts payable



10,233


9,093


   Accrued expenses and other



9,686


6,959


   Operating lease liabilities



904


1,169


   Provision for restructuring plan



190


657









   Total current liabilities



28,990


24,577









NON-CURRENT LIABILITIES:







   Long-term loans



19,408


5,979


   Liability in respect of employee rights upon retirement



1,148


1,504


   Operating lease liabilities



1,535


1,989









   Total non-current liabilities



22,091


9,472
















COMMITMENTS AND CONTINGENCIES (NOTE 15)













Total liabilities



51,081


34,049









EQUITY:







Ordinary shares of NIS 0.9 par value:

Authorized: 13,000,000 shares at December 31, 2022 and at

December 31, 2021; Issued: 9,186,019 and 9,149,169 shares at

December 31, 2022 and at December 31, 2021 respectively;

Outstanding: 8,911,546 and 8,874,696 shares at December 31, 2022

and at December 31, 2021 respectively



2,842


2,809


Additional paid-in capital



66,245


65,871


Treasury shares, at cost, 274,473 shares at December 31, 2022 and 2021



(2,088)


(2,088)


Accumulated other comprehensive income (loss)



(26)


33


Retained earnings



8,597


10,159


Total shareholders’ equity



75,570


76,784
















Total liabilities and shareholders’ equity



$  126,651


$  110,833


The accompanying notes are an integral part of the consolidated financial statements.




Year ended December 31,





2022


2021


2020











Revenue:









  Products



$      25,460


$       25,870


$       22,739


  Services



59,096


52,103


52,620





84,556


77,973


75,359











Cost of revenue, net:









Products



21,631


23,761


20,751


Services



46,997


42,942


46,173





68,628


66,703


66,924











Gross profit



15,928


11,270


8,435











Operating expenses:









Research and development, net



479


517


185


Selling and marketing, net



5,629


5,147


4,369


General and administrative, net



9,970


8,354


7,612


Other (income) expenses



(90)


(468)


315


Restructuring expenses, net



1,715


1,755















17,703


15,305


12,481











Operating (loss)



(1,775)


(4,035)


(4,046)











Interest expenses



(902)


(250)


(96)


Other financial income (expenses), net



1,029


(290)


(674)




















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



(1,648)


(4,575)


(4,816)











Taxes on income (tax benefit)



98


(662)


(1,517)











Loss before share of equity investment



(1,746)


(3,913)


(3,299)











Share in profit (losses) of equity investment of affiliated

companies



184


(76)


(185)











Net loss from continued operation



$      (1,562)


$       (3,989)


$        (3,484)
























The accompanying notes are an integral part of the consolidated financial statements.




Year ended December 31,




2022


2021


2020









Net income (loss) from discontinued operation




$          427


$     (1,845)

Net loss



$     (1,562)


$     (3,562)


$     (5,329)









Net loss per share basic and diluted from continued

operation



$      (0.175)


$       (0.45)


$       (0.39)

Net income (loss) per share basic and diluted from

discontinued operation




$         0.05


$       (0.21)

Net loss per share basic and diluted



$      (0.175)


$         (0.4)


$         (0.6)









Weighted average number of shares outstanding:








Basic and diluted



8,911,546


8,874,696


8,874,696

















The accompanying notes are an integral part of the consolidated financial statements.




Year ended December 31,






2022


2021


2020













Net loss)



$      (1,562)


$      (3,562)


$      (5,329)



Other comprehensive income (loss), net










Net unrealized gains (losses) from derivatives



(89)


(76)


232



Reclassification adjustments for (gains) from

derivatives included in net income



30


(19)


(130)



Total other comprehensive income (loss)



$            (59)


$            (95)


$           102



 

Total comprehensive loss



$      (1,621)


$       (3,657)


$       (5,227)



The accompanying notes are an integral part of the consolidated financial statements.




















Ordinary shares














Number of

shares issued


Amount


Additional paid-in

capital


Accumulated

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 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 YEAR ENDED

   DECEMBER 31, 2022:
















Comprehensive loss





(59)



(1,562)


(1,621)


Exercise of Options


36,850


33


156





189


Share based compensation




218





218


BALANCE AT DECEMBER 31, 2022


9,186,019


$       2,842


$  66,245


$                 (26)


$             (2,088)


$          8,597


$     75,570


























The accompanying notes are an integral part of the consolidated financial statements.










Year ended December 31,



2022


2021


2020








CASH FLOWS FROM OPERATING ACTIVITIES:







Net income (loss) from continued operations


$     (1,562)


$     (3,989)


$    (3,484)








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

   operating activities:







Depreciation and amortization


3,706


4,881


4,065

Loss (gain) from change in fair value of derivatives


8


(19)


(34)

Change in operating right of use asset and operating leasing liability


(82)


(73)


566

Lease modification



(1,315)


Increase (decrease) in restructuring plan provision


(467)


657


Change in provision for doubtful accounts


138


248


(8)

Share in results of affiliated companies


(184)


76


185

Share based compensation


218


160


138

Liability in respect of employee rights upon retirement


(356)


94


(341)

Impairment of intangible assets




298

Impairment of fixed assets



1,820


Capital gain from sale of property, plant and equipment


(90)


(468)


Deferred income taxes, net


23


(686)


(1,438)

Government loan forgiveness



(1,442)


Changes in operating assets and liabilities:







    Decrease (increase) in trade accounts receivable


(2,659)


(2,934)


9,472

Decrease (increase) in other current assets and prepaid expenses


(1,459)


(959)


310

    Decrease (increase) in inventory


(5,069)


(681)


1,868

    Increase (decrease) in trade accounts payable


1,143


2,571


(5,336)

    Increase (decrease) in accrued expenses


2,727


(218)


(252)

    Increase (decrease) in other long-term liabilities


(902)


8


(62)

Net cash provided by (used in) operating activities from continued operation


$      (4,867)


$      (2,269)


$      5,947








CASH FLOWS FROM INVESTING ACTIVITIES:







Proceeds from sale of property and equipment


93


1,163


Purchase of property and equipment


(16,213)


(16,247)


(3,894)

Purchase of intangible assets



(555)


(1,513)

Net cash used in continued investing activities


$    (16,120)


$    (15,639)


$    (5,407)

The accompanying notes are an integral part of the consolidated financial statements.







Year ended December 31,




2022


2021


2020


CASH FLOWS FROM FINANCING ACTIVITIES:








Repayments of long-term loans


(1,071)



Short-term credit received from banks



3,000


3,960


Proceeds from long-term loans received


16,680


3,042


3,692


Exercise of options


189



Net cash provided by continued financing activities


$     15,798


$          6,042


$           7,652










CASH FLOWS FROM DISCONTINUED ACTIVITIES:








Net cash provided by operating activities



777


153


Net cash provided by (used in) discontinued activities



$             777


$              153










NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS AND

  RESTRICTED CASH


(5,189)


(11,089)


8,345


CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT

  BEGINNING OF YEAR


13,215


24,304


15,959


CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF

  YEAR


8,026


13,215


24,304


 

SUPPLEMENTARY INFORMATION ON INVESTING ACTIVITIES

  NOT INVOLVING CASH FLOW:







Purchase of property, plant and equipment on credit


$                 196


$            199


$              6,575

Additions of operating lease right-of-use assets and operating lease liabilities


$                 318


$            399


$              1,756

Classification inventory to property, plant and equipment


284


$            829


Classification inventory to property, plant and equipment


$                 787










Supplemental disclosure of cash flow information:







Interest paid


(796)


$           (251)


$                   (3)

Income taxes received (paid), net



$                  –


$                   (3)

























The accompanying notes are an integral part of the consolidated financial statements

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

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

(In thousands)






December 31,


December 31,

2022


2021


(audited)


(audited)

Net income (loss)

$                   (1,562)


$                   (3,562)

Adjustments:




Share in results of equity investment of affiliated companies

(184)


76

Taxes on income (tax benefit)

98


(662)

Financial expenses, net

(127)


540

Depreciation and amortization

3,878


5,420

Net loss (income) from discontinued operation


(427)

Share base compensation

218


160

Restructuring expenses

1,715


1,755





Adjusted EBITDA

4,036


3,300

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.

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]

SOURCE TAT Technologies Ltd.


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