TAT Technologies Reports Full Year 2022 Results

About this update from Tat Technologies Ltd.

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 Y TD 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 Accumulatedother 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 OfficerTel: 972-8-862-8503 [email protected] View original content: https://www.prnewswire.com/news-releases/tat-technologies-reports-full-year-2022-results-301785219.html SOURCE TAT Technologies Ltd.

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