TAT Technologies Reports First Quarter 2022 Results

About this update from Tat Technologies Ltd.

NETANIA, Israel , May 31, 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 period ended March 31 , 20 2 2. Financial highlights for the first quarter of 2022: Revenues for Q1 2022 increased by 8.1% to $19.9 million compared to $18.4 million in Q1 2021. Gross profit for Q1 2022 was $3 million (15.2% of revenues) compared to $3.4 million in Q1 2021 (18.5% of revenues). Adjusted EBITDA for Q1 2022 decreased to $0.5 million compared to $1.6 million in Q1 2021. Net loss for Q1 2022 was $1.6 million compared to a net income of $0.6 million in Q1 20 2 1. Q1 2021 Gross Profit, EBITDA and Net Income included government rants in the amount of $1.4 million ( $1 million recorded in the COGS and an additional $0.4 million recorded in G&A) Mr. Igal Zamir , TAT's CEO and President commented on the results: "As air travel begins to recoup and more and more plains resume flights, we see a growing demand for our services and products and an increase in order intake. We are working relentlessly to meet this demand despite strong headwinds resulting from supply chain issues and shortages in raw materials, which are hampering our ability to fully ramp up our production. During Q1 of 2022 we continued making significant steps in improving our manufacturing efficiencies as we successfully completed merging our 2 facilities in Israel to a single manufacturing site. We believe the cost savings expected from this unification will begin to impact us toward the second half of 2022. In addition we continue to invest in building additional MRO and production capabilities, following the strategic contacts recently signed with Honeywell and hope to have these new capabilities available by the end of this year." "Given our growing backlog, the continued recovery of commercial airline traffic and the strategic agreements we signed with Honeywell, coupled with the actions we have taken and to improve our manufacturing efficiencies, I am optimistic about our ability to continue our topline and bottom line growth." concluded Mr. Zamir Mr Zamir added: "Mr. Ron Ben-Haim has informed our Board of Directors of his retirement from his directorship position effective, May 30, 2022 . I wish to thank Ron for his service on behalf of the Company, its board of directors, its management and its employees" 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) March 31 , December 31 , 2022 2021 (unaudited) (audited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 12,798 $ 12,872 Accounts receivable, net 14,686 13,887 Inventory, net 43,210 41,003 Other current assets and prepaid expenses 4,327 4,219 Total current assets 75,021 71,981 NON-CURRENT ASSETS: Restricted deposit 333 343 Investment in affiliates 668 695 Funds in respect of employee rights upon retirement 1,086 1,157 Deferred income taxes 1,147 1,252 Intangible assets, net 1,777 1,829 Property, plant and equipment, net 33,780 30,462 Operating lease right of use assets 2,534 3,114 Total non-current assets 41,325 38,852 Total assets $ 116,346 $ 110,833 LIABILITIES AND EQUITY CURRENT LIABILITIES: Current maturities of long-term loans $ 1,088 $ 691 Credit line from bank 3,016 6,008 Accounts payable 9,860 9,093 Accrued expenses 6,917 6,959 Operating lease liabilities 609 1,169 Provision for restructuring plan 312 657 Total current liabilities 21,802 24,577 NON CURRENT LIABILITIES: Long-term loans 15,917 5,979 Liability in respect of employee rights upon retirement 1,387 1,504 Operating lease liabilities 1,934 1,989 Total non-current liabilities 19,238 9,472 Total liabilities $ 41,040 $ 34,049 EQUITY: Share capital 2,820 2,809 Additional paid-in capital 65,976 65,871 Treasury stock at cost (2,088) (2,088) Accumulated other comprehensive income 1 33 Retained earnings 8,597 10,159 Total shareholders' equity 75,306 76,784 Total liabilities and shareholders' equity $ 116,346 $ 110,833 TAT TECHNOLOGIES AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share data) Three months ended Year ended March 31 , December 31 , 2022 2021 2021 (Unaudited) (Unaudited) (Audited) Revenues: Products $ 6,319 $ 4,154 $ 25,870 Services 13,635 14,206 52,103 19,954 18,360 77,973 Cost of goods: Products 5,744 3,610 23,761 Services 11,165 11,352 42,942 16,909 14,962 66,703 Gross Profit 3,045 3,398 11,270 Operating expenses: Research and development, net (27) 136 517 Selling and marketing 1,335 1,205 5,147 General and administrative 2,385 1,622 8,354 Other income (81) (13) (468) Restructuring and other expenses 927 533 1,755 4,539 3,483 15,305 Operating loss (1,494) (85) (4,035) Financial income (expenses), net 66 397 (540) Income (loss) before taxes on income (tax benefit) (1,428) 312 (4,575) Taxes on income (tax benefit) 107 (131) (662) Income (loss) before share of equity investment (1,535) 443 (3,913) Share in results of affiliated companies (27) (12) (76) Net income (loss) from continued operation $ (1,562) $ 431 $ (3,989) Net income from discontinued operation - 156 $ 427 Net income (loss) $ (1,562) $ 587 $ (3,562) Basic and diluted income per share Net income (loss) per share basic and diluted from continued operation $ (0.17) $ 0.05 $ (0.45) Net income per share basic and diluted from discontinued operation $ - $ 0.02 $ 0.05 Net income (loss) per share basic and diluted $ (0.17) $ 0.07 $ (0.4) Weighted average number of shares outstanding Basic 8,886,546 8,874,696 8,874,696 Diluted 8,886,546 8,874,696 8,874,696 TAT TECHNOLOGIES AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Three months ended Year ended March 31 , December 31 , 2022 2021 2021 (Unaudited) (Unaudited) (Audited) Net income (loss) $ (1,562) $ 587 $ (3,562) Other comprehensive income (loss) Net unrealized losses from derivatives (32) (143) (76) Reclassification adjustments for gains included in net income and inventory - - (19) Total comprehensive income ( loss) $ (1,594) $ 444 $ (3,657) 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, 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 MARCH 31, 2022 (unaudited): Comprehensive loss - - - (32) - (1,562) (1,594) Exercise of option 11,850 11 56 - - - 67 Share based compensation - - 49 - - - 49 BALANCE AT MARCH 31, 2022 (unaudited) 9,161,019 $ 2,820 $ 65,976 $ 1 $ (2,088) 8,597 $ 75,306 TAT TECHNOLOGIES AND ITS SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Three months ended Year ended March 31 , December 31 , 2022 2021 2021 (Unaudited) (Unaudited) (audited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) from continued operations (1,562) 431 (3,989) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 973 1,056 4,881 Loss (gain) from change in fair value of derivatives 17 (9) (19) Provision for doubtful accounts - - 248 Share in results of affiliated Company 27 12 76 Share based compensation 49 26 160 Noncash finance expense (35) (397) (73) Lease modification - - (1,315) Increase (decrease) in provision for restructuring expenses (345) 533 657 Liability in respect of employee rights upon retirement (117) (127) 94 Impairment of fixed assets - - 1,820 Capital gain from sale of fixed assets (81) - (468) Deferred income taxes, net 107 (136) (686) Government loan forgiveness - (1,442) (1,442) Changes in operating assets and liabilities: Increase in trade accounts receivable (895) (1,573) (2,934) Decrease (increase) in other current assets and prepaid expenses (62) (181) (959) Decrease (increase) in inventory (2,222) 798 (681) Decrease in trade accounts payable 536 (106) 2,571 Increase (decrease) in accrued expenses 42 560 (218) Decrease in other long-term liabilities (161) (27) 8 Net cash provided by (used in) operating activities $ (3,729) $ (583) $ (2,269) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property and equipment 84 - 1,163 Purchase of property and equipment (4,010) (7,605) (16,247) Purchase of intangible assets - (285) (555) Cash flows used in investing activities $ (3,926) $ (7,890) $ (15,639) CASH FLOWS FROM FINANCING ACTIVITIES: Short-term credit received (Repayments) from banks (3,000) 3,000 3,000 Proceeds from long-term loans received 10,504 3,042 3,042 Exercise of options 67 - - Cash flows provided by financing activities $7,571 $6,042 $ 6,042 CASH FLOWS FROM DISCONTINUED ACTIVITIES: Net profit from discontinued operation - 156 777 Net cash provided by discontinued activities $ - $ 156 $ 777 Net decrease in cash and cash equivalents and restricted cash (84) (2,275) (11,089) Cash and cash equivalents and restricted cash at beginning of period 13,215 24,304 24,304 Cash and cash equivalents and restricted cash at the end of period $ 13,131 $ 22,029 $ 13,215 TAT TECHNOLOGIES AND ITS SUBSIDIARIES RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP) (UNAUDITED) (In thousands) Three months ended Year ended March 31 , December 31 , 2022 2021 2021 Net income $ (1,562) $ 587 $ (3,562) Adjustments: Share in results and sale of equity investment of affiliated companies 27 12 76 Taxes on income (tax benefit) 107 (131) (662) Financial expense/ (income), net (66) (397) 540 Depreciation and amortization 1,025 1,105 5,420 Restructuring expenses 927 533 1,755 Discontinued operation income - (156) (427) Share based compensation 49 26 160 Adjusted EBITDA $ 507 $ 1,579 $ 3,300 View original content: https://www.prnewswire.com/news-releases/tat-technologies-reports-first-quarter-2022-results-301557751.html SOURCE TAT Technologies Ltd.

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