TAT Technologies Reports Third Quarter 2023 Results

NETANYA, Israel, Nov. 13, 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 months and nine months periods ended September 30, 2023.

Financial highlights for third quarter of 2023:

  • Revenues for Q3 2023 were $29.9 million, an increase of 43% compared with $20.9 million in Q3 2022. Revenues for the nine-month period that ended on September 30, 2023, were $81.9 million an increase of 33% compared with $61.7 million in the nine-month period that ended on September 30, 2022.
  • Gross profit for Q3 2023 was $5.8 million (19. 3% as a percentage of revenues) an increase of 70% compared with $3.4 million (16.4% as a percentage of revenues) in Q3 2022. Gross profit for the nine-month period that ended on September 30, 2023, was $15.5 million (19% as a percentage of revenues) an increase of 47.6% compared with $10.5 million (17% as a percentage of revenues) in the nine-month period that ended on September 30, 2022.
  • Adjusted EBITDA for Q3 2023 increased by 438% to $3 million compared with $0.6 million in Q3 2022. Adjusted EBITDA for the nine-month period that ended on September 30, 2023, increased by 297% to $7.7 million compared with $1.9 million in the nine-month period that ended on September 30, 2022.
  • Net lncome in Q3 2023 increased to $2.1 million, or income of $0.24 per diluted share, compared with a net loss of ($0.3) million, or loss of ($0.04) per diluted share, in Q3 2022. For the nine-month period that ended on September 30, 2023, net income was $4.3 million, or income of $0.47 per diluted share compared with a net loss of ($2) million, or $(0.23) per diluted share, in the nine-month period that ended on September 30, 2022.
  • Cash flow from operations in Q3 2023 was negative ($3.7) million compared to negative ($3.1) million in Q3 2022. For the nine-month period ended on September 30, 2023 cash flow from operations was positive $0.5 million compared to negative ($9.5) million in the nine-month period that ended on September 30, 2022.

Mr. Igal Zamir, TAT’s CEO and President commented on the results: “we are very pleased with the results of the third quarter and nine months of 2023. We are facing swift growth in demand for our products and services, which has resulted in increasing revenue and profitability quarter after quarter. We remain positive that the trend will continue for the following quarters to come.

As part of our preparation to support the growth in the following quarters and meeting customers’ expectations for a short turnaround time, we focus on operational ramp up including manpower hiring and increasing the level of our available inventories.”

Mr. Zamir continues: ” In regard to the war in Israel, at this stage, there are no indications that prohibit us from continuing the growth and meeting our plans for the following quarters to come.

We are very proud of our employees in the Israeli facility for their spirit and consistent effort to continue the operations despite the war in Israel. “

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

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)




September 30,


December 31,

2023


2022


(unaudited)


(audited)

ASSETS




CURRENT ASSETS:




Cash and cash equivalents

$      7,288


$      7,722

Accounts receivable, net

17,890


15,622

Inventory, net

49,005


45,759

Other current assets and prepaid expenses

5,094


6,047





          Total current assets

79,277


75,150





NON-CURRENT ASSETS:

   Restricted deposit

286


304

 Investment in affiliates

2,012


1,665

Funds in respect of employee rights upon retirement

661


780

 Deferred income taxes

1,693


1,229

Intangible assets, net

1,608


1,623

Property, plant and equipment, net

41,917


43,423

Operating lease right of use assets

3,022


2,477





     Total non-current assets

51,199


51,501


Total assets

$130,476


$    126,651





LIABILITIES AND EQUITY








CURRENT LIABILITIES:




Current maturities of long-term loans

$        1,874


$        1,876

Credit line from bank

12,131


6,101

Accounts payable

8,558


10,233

Accrued expenses and other                             

10,889


9,686

Operating lease liabilities

1,073


904

Provision for restructuring plan

85


190





Total current liabilities

34,610


28,990





NON CURRENT LIABILITIES:




   Long-term loans

12,820


19,408

Liability in respect of employee rights upon retirement

993


1,148

Operating lease liabilities

1,904


1,535





 Total non-current liabilities

15,717


22,091









Total liabilities

$50,327


$        51,081





EQUITY:




Share capital

2,850


2,842

Additional paid-in capital

66,531


66,245

Treasury stock at cost

(2,088)


(2,088)

Accumulated other comprehensive income (loss)

(24)


(26)

Retained earnings

12,880


8,597

Total shareholders’ equity

80,149


75,570





Total liabilities and shareholders’ equity

130,476


$      126,651





TAT TECHNOLOGIES AND ITS SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF INCOME

 (In thousands, except share and per share data)



Three months ended


Nine months ended


Year ended


September 30,


December 31,


2023


2022


2023


2022


2022


(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Audited)











Revenues:










Products

$    10,003


$   5,694


$   25,461


$   19,157


$   25,460

Services

19,932


15,283


56,496


42,550


59,096


29,935


20,977


81,957


61,707


84,556











Cost of revenue, net:










Products

7,550


4,710


19,372


16,280


21,631

Services

16,571


12,833


47,086


34,915


46,997


24,121


17,543


66,458


51,195


68,628

Gross Profit

5,814


3,434


15,499


10,512


15,928











Operating expenses:










Research and development, net

194


197


450


349


479

Selling and marketing, net

1,350


1,312


3,807


4,164


5,629

General and administrative, net

2,547


2,463


7,482


7,341


9,970

Other income

(37)



(478)


(90)


(90)

Restructuring expenses, net


(30)



1,673


1,715


4,054


3,942


11,261


13,437


17,703











Operating Profit (Loss)

1,760


(508)


4,238


(2,925)


(1,775)











Interest expenses

(408)


(283)


(1,214)


(524)


(902)

Other financial income (expenses), Net

283


356


433


1,171


1,029

Income (loss) before taxes on income (tax

     benefit)

1,635


(435)


3,457


(2,278)


(1,648)











Taxes on income (tax benefit)

(390)


(44)


(479)


(107)


98











Income (loss) before share of equity investment

2,025


(391)


3,936


(2,171)


(1,746)











Share in profits (losses) of equity investment of

     affiliated companies

126


36


347


124


184





















Net Income (loss)

2,151


$  (355)


$ 4,283


$  (2,047)


$      (1,562)











Basic and diluted income per share




















Net income (loss) per share

$ 0.24


$     (0.04)


$ 0.48


$   (0.23)


$     (0.17)

Net income per diluted shares

$ 0.24


$     (0.04)


$ 0.47


$  (0.23)


$     (0.17)











Weighted average number of shares

     outstanding










  Basic

8,929,332


8,909,046


8,929,332


8,909,046


8,911,546

  Diluted

9,134,476


8,909,046


9,134,476


8,909,046


8,911,546











TAT TECHNOLOGIES AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)





Three months ended


Nine months ended


Year ended 



September 30,

December 31,



2023


2022


2023


2022


2022



(Unaudited)


(Unaudited)


(Unaudited)


(Unaudited)


(Audited)
























Net income (loss)

$2,151


$  (355)


$ 4,283


$ (2,047)


$ (1,562)

Other comprehensive income (loss), net










     Net unrealized gain (loss) from derivatives

(24)


34


2


(114)


(89)

     Reclassification adjustments for loss (gains)

          from derivatives included in net income





30

Total comprehensive income (loss)

$ 2,149


$  (321)


$ 4,285


$(2,161)


$ (1,621)



























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, 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

     SEPTEMBER 30, 2023 (unaudited):
















Comprehensive income





2



4,283


4,285


Exercise of option


32,466


8


157





165


Share based compensation




129





129


BALANCE AT SEPTEMBER 30, 2023

     (unaudited)


9,218,485


$            2,850


$       66,531


$          (24)


$          (2,088)


12,880


$            80,149


TAT TECHNOLOGIES AND ITS SUBSIDIARIES


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)




Three months ended


Nine months ended


Year ended



September 30,


December 31,



2023


2022


2023

2022


2022



(Unaudited)


(Unaudited)


(Unaudited)

(Unaudited)


(Audited)

CASH FLOWS FROM OPERATING ACTIVITIES:










Net income (loss)


$2,151


$(355)


$  4,283

$(2,047)


$ (1,562)

Adjustments to reconcile net income (loss) to net cash

     provided by (used in) operating activities:




















Depreciation and amortization


1,099


931


3,040

2,830


3,706

Loss (gain) from change in fair value of derivatives



(7)


1


8

Change in provision for doubtful accounts


(83)



(88)

(45)


138

Share in results of affiliated Company 


(126)


(36)


(347)

(124)


(184)

Share based compensation


8


56


129

167


218

Non cash finance income


(1)


(4)


(7)

(91)


Change in operating right of use asset and operating leasing

     liability









(82)

Decrease in provision for restructuring expenses


(15)


(914)


(105)

(457)


(467)

Liability in respect of employee rights upon retirement


(28)


9


(155)

(317)


(356)

Capital gain from sale of property, plant and equipment


(43)



(529)

(90)


(90)

Deferred income taxes, net


(388)


(47)


(464)

(128)


23

Changes in operating assets and liabilities:










    Decrease (increase) in trade accounts receivable


(4,051)


1,127


(2,927)

(219)


(2,659)

     Decrease (increase)  in other current assets and prepaid

   expenses


(1)


(557)


1,535

(672)


(1,459)

    Increase in inventory


(4,450)


(3,485)


(4,734)

(6,711)


(5,069)

    Increase (decrease) in trade accounts payable


480


(182)


(1,675)

(1,073)


1,143

    Decrease in other long-term liabilities


(254)


(160)


(502)

(1,045)


(902)

    Increase in accrued expenses


1,976


499


3,039

531


2,727

Net cash provided by (used  in) operating activities


$(3,726)


$(3,125)


$493

$(9,490)


$(4,867)











CASH FLOWS FROM INVESTING ACTIVITIES:










Proceeds from sale of property and equipment


37



1,972

93


93

Purchase of property and equipment


(569)


(3,833)


(3,024)

(11,418)


(16,213)

Net cash provided by (used in) investing activities


$(532)


$(3,833)


$(1,052)

$(11,325)


$(16,120)











CASH FLOWS FROM FINANCING ACTIVITIES:










  Short-term credit received (repayment) from banks


1,000


3,000


1,000


  Proceeds from long-term loans received


249


3,200


249

15,680


16,680

  Repayment of long-term loans


(461)


(375)


(1,307)

(636)


(1,071)

  Exercise of options



123


165

190


189

Cash flows provided by (used in) financing activities


$788


$5,948


$107

$15,234


$       15,798





















Net decrease in cash and restricted cash


(3,470)


(1,010)


(452)

(5,581)


(5,189)

Cash and cash equivalents and restricted cash at

     beginning of period


11,044


8,644


8,026

13,215


13,215

Cash and cash equivalents and restricted cash at end of

     period


$7,574


$  7,634


$7,574

$  7,634


$  8,026

TAT TECHNOLOGIES AND ITS SUBSIDIARIES


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

(In thousands)





Three months ended

Nine months ended

Year ended


September 30,

September 30,

December 31,


2023


2022

2023

2022

2022















Net income (loss)

$2,151


$ (355)

$4,283

$(2,047)

$(1,562)

Adjustments:














Share in results of equity investment

     of affiliated companies

(126)


(36)

(347)

(124)

(184)

Taxes on income (tax benefit)

(390)


(44)

(480)

(107)

98

Financial expenses (income), net

125


(73)

781

(647)

(127)

Depreciation and amortization

1,240


1,041

3,381

3,037

3,878

Restructuring (income) expenses


(30)

1,673

1,715

       Share based compensation

9


56

129

167

218

Adjusted EBITDA

3,009


$559

7,747

$1,952

$4,036








SIGNATURE

            Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

                                                                                                    TAT TECHNOLOGIES LTD.
                                                                                                                (Registrant)

                                                                                                    By: /s/ Ehud Ben-Yair
                                                                                                         Ehud Ben-Yair
                                                                                                         Chief Financial Officer

Date: November 13, 2023

SOURCE TAT Technologies Ltd.


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