TAT Technologies Reports Second Quarter 2023 Results

NETANYA, Israel, Aug. 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 unaudited results for the three-month and six-month period ended June 30, 2023.

Financial highlights for H1 of 2023:

·  Revenues for Q2 2023 were $26.8 million, an increase of 29% compared with $20.8 million in Q2 2022.  Revenues for the six-month period that ended on June 30,2023 increased by 28% to $52.02 million compared with $40.7 million in the six-month period that ended on June 30, 2022.

·  Gross profit for Q2 2023 was $5.4 million (20.3% as a percentage of revenues) an increase of 35% compared with $4 million (19.4% as a percentage of revenues) in Q2 2022.  Gross profit for the six-month period that ended on June 30, 2023 was $9.7 million (18.6% as a percentage of revenues) an increase of 36.8% compared with $7 million (17.4% as a percentage of revenues) in the six-month period that ended on June 30, 2022.

·  Adjusted EBITDA for Q2 2023 increased by 291% to $2.57 million compared with $0.9 million in Q2 2022. Adjusted EBITDA for the six-month period that ended on June 30, 2023 increased by 340% to $4.74 million compared with $1.4 million in the six-month period that ended on June 30, 2022.

·  Net lncome in Q2 2023 increased to $1.5 million, or income of $0.15 per diluted share, compared with a net loss of ($0.1) million, or loss of ($0.01) per diluted share, in Q2 2022. For the six-month period that ended on June 30, 2022, net income was $2.1 million, or income of $0.23 per diluted share compared with a net loss of ($1.7) million, or $(0.19) per diluted share in the six-month period that ended on June 30, 2022.

·  Cash flow from operations in Q2 2023 was positive $2.5 million compared to negative ($2.6) million in Q2 2022. For the six-month period ended on June 30, 2023 cash flow from operations was positive $4.2 million compared to negative ($6.4) million in in the six-month period that ended on June 30, 2022.

Mr. Igal Zamir, TAT’s CEO and President commented on the results: “We are excited with the results of the second quarter and the first six month of 2023. TAT continues to improve its revenues, gross margins and profitability. We are enjoying an increase in OEM purchase orders and MRO intake, and with a combination of a positive recovery trend in supply chain and materials availability, both OEM and MRO segments are improving. We continue to grow our APU line of business, a direct result of the Company’s growth strategy, and our operations are focused on increasing capacity and improving efficiency to meet our customers’ growing demand and expectations across all business segments.

Mr. Zamir continued: “We are very optimistic with the expected results for the second half of the year as we see a strong order backlog. We are prepared to implement the second wave of our landing gear contracts with 2 of our strategic customers, which will yield additional revenues towards 2024. Also, we completed our operational preparations to enable us to bid for RFPs to support both the APU 331-500 and APU 131 product lines serving a worldwide fleet of over 17,000 aircrafts.”

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
[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,

2023

2022

(unaudited)

(audited)

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$                10,748

$       7,722

Accounts receivable, net

14,504

15,622

Inventory, net

44,744

45,759

Other current assets and prepaid expenses

5,985

6,047

Total current assets

75,981

75,150

NON-CURRENT ASSETS:

 Restricted deposit

296

304

 Investment in affiliates

1,886

1,665

Funds in respect of employee rights upon retirement

683

780

 Deferred income taxes

1,305

1,229

Intangible assets, net

1,665

1,623

Property, plant and equipment, net

42,391

43,423

Operating lease right of use assets

2,119

2,477

Total non-current assets

50,345

51,501

Total assets

$                 126,326

$     126,651

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Current maturities of long-term loans

$                    1,975

$         1,876

Credit line from bank

6,091

6,101

Accounts payable

8,078

10,233

Accrued expenses and other

10,748

9,686

Operating lease liabilities

825

904

Provision for restructuring plan

100

190

Total current liabilities

27,817

28,990

NON CURRENT LIABILITIES:

    Long-term loans

18,224

19,408

Liability in respect of employee rights upon retirement

1,021

1,148

Operating lease liabilities

1,250

1,535

 Total non-current liabilities

20,495

22,091

Total liabilities

$                48,312

51,081

EQUITY:

Share capital

2,850

2,842

Additional paid-in capital

66,522

66,245

Treasury stock at cost

(2,088)

(2,088)

Accumulated other comprehensive income (loss)

(26)

Retained earnings

10,730

8,597

Total shareholders’ equity

78,014

75,570

Total liabilities and shareholders’ equity

$                 126,326

$       126,651

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,

2023

2022

2023

2022

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

Revenues:

Products

$    8,167

$   7,144

$   15,458

$   13,463

$   25,460

Services

18,637

13,631

36,564

27,267

59,096

26,804

20,775

52,022

40,730

84,556

Cost of goods:

Products

5,548

5,826

11,822

11,569

21,631

Services

15,830

10,917

30,515

22,083

46,997

21,378

16,743

42,337

33,652

68,628

Gross Profit

5,426

4,032

9,685

7,078

15,928

Operating expenses:

Research and development, net

157

180

256

153

479

Selling and marketing

1,298

1,517

2,457

2,852

5,629

General and administrative

2,474

2,494

4,933

4,879

9,970

Other income

(35)

(9)

(441)

(90)

(90)

Restructuring expenses

775

1,703

1,715

3,894

4,957

7,205

9,497

17,703

Operating Profit (Loss)

1,532

(925)

2,480

(2,419)

(1,775)

Interest expenses

(440)

(136)

(806)

(240)

(902)

Other financial income (expenses), Net

167

645

148

814

1,029

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

1,259

(417)

1,822

(1,845)

(1,648)

Taxes on income (tax benefit)

(63)

(170)

(90)

(63)

98

Income (loss) before share of equity investment

1,322

(247)

1,912

(1,782)

(1,746)

Share in profits (losses) of equity investment of affiliated companies

153

115

221

88

184

Net Income (loss)

$   1,475

$   (132)

$   2,133

$   (1,694)

$       (1,562)

Basic and diluted income per share

Net income (loss) per share

$      0.16

$      (0. 01)

$    0.24

$    (0.19)

(0.17)

Net income per diluted shares

$    0.15

$      (0. 01)

$   0.23

$    (0.19)

$      (0.17)

Weighted average number of shares outstanding

Basic

8,942,423

8,886,546

8,942,423

8,886,546

8,911,546

Diluted

9,052,163

8,886,546

9,052,163

8,886,546

8,911,546

TAT TECHNOLOGIES AND ITS SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three months ended

Six months ended

Year ended 

June 30,

December 31,

2023

2022

2023

2022

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

Net income (Loss)

$    1,475

$     (132)

$     2,133

 

$     (1,694)

$     (1,562)

Other comprehensive income (loss), net (

Net unrealized income (loss) from derivatives

26

(116)

26

(148)

(89)

Reclassification adjustments for gains included in net income

 

30

       Total comprehensive income (loss)

$     1,501

$    (248)

$     2,159

$    (1,842)

$     (1,621)

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, 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 option

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

CHANGES DURING THE PERIOD ENDED
JUNE 30, 2023 (unaudited):

Comprehensive profit

26

2,133

2,159

Exercise of option

30,877

8

157

165

Share based compensation

120

120

BALANCE AT JUNE 30, 2023 (unaudited)

9,216,896

$            2,850

$       66,522

$              –

$            (2,088)

10,730

$            78,014

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,

2023

2022

2023

2022

2022

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

(Audited)

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)

$  1,475

$  (132)

$  2,133

$  (1,694)

(1,562)

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

Depreciation and amortization

901

926

1,942

1,899

3,706

Loss (gain) from change in fair value of derivatives

0

(9)

0

8

8

Provision for doubtful accounts

(2)

(45)

(5)

(45)

138

Share in results of equity investment of affiliated Company 

(153)

(115)

(221)

(88)

(184)

Share based compensation

30

62

120

111

218

Non cash finance (income) expense

(777)

(6)

(972)

Change in operating right of use asset and operating leasing liability

(82)

Increase (decrease) in provision for restructuring expenses

(32)

802

(90)

457

(467)

Liability in respect of employee rights upon retirement

(47)

(209)

(127)

(326)

(356)

Capital gain from sale of property, plant and equipment

(29)

(9)

(485)

(90)

(90)

Deferred income taxes, net

(98)

(188)

(76)

(81)

23

Changes in operating assets and liabilities:

    Decrease (increase) in trade accounts receivable

3,137

(451)

1,123

(1,346)

(2,659)

   Decrease (increase) in other current assets and prepaid expenses

332

 

(81)

1,537

 

(60)

 

(1,459)

Decrease (increase) in inventory

(3,248)

(1,143)

(285)

(3,365)

(5,069)

    Increase (decrease) in trade accounts payable

(1,034)

(1,428)

(2,155)

(892)

1,143

     Decrease in other long-term liabilities

(134)

(248)

(902)

    Increase (decrease) in accrued expenses

1,352

161

1,062

119

2,727

Net cash provided by operating activities

$2,452

$ (2,636)

$ 4,219

$ (6,365)

$     (4,867)

 

CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sale of property and equipment

375

9

1,935

93

93

Purchase of property and equipment

(1,021)

(3,575)

(2,454)

(7,585)

(16,213)

Cash flows used in investing activities

$ (646)

$ (3,566)

$(519)

$(7,492)

$  (16,120)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

  Repayment of long-term loans

(425)

(261)

(847)

(3,261)

(1,071)

  Proceeds from long-term loans received

1,976

12,480

16,680

   Exercise of options

165

165

67

189

Cash flows provided by financing activities

$ (260)

$ 1,715

$(682)

$9,286

15,798

Net increase (decrease) in cash and restricted cash

1546

(4,487)

3,018

(4,571)

(5,189)

Cash and cash equivalents and restricted cash at
 beginning of period

9,498

 

13,131

8,026

 

13,215

 

13,215

Cash and  cash equivalents and  restricted cash at end of period

$  11,044

 

$  8,644

$  11,044

 

$  8,644

 

$  8,206

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,

2023

2022

2023

2022

2022

Net income (Loss)

$  1,475

$   (132)

$  2,133

$  (1,694)

$    (1,562)

Adjustments:

Share in results of equity investment of affiliated companies

(153)

(115)

 

(221)

 

(88)

 

(184)

Taxes on income (tax benefit)

(63)

(170)

(90)

(63)

98

Financial expenses (income), net

272

(508)

658

(574)

(127)

Depreciation and amortization

1,006

974

2,140

1,998

3,878

Restructuring expenses

775

1,703

1,715

Share based compensation

30

62

120

111

218

Adjusted EBITDA

$     2,567

$     886

$     4,740

$     1,393

$      4,036

SOURCE TAT Technologies Ltd.

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