TAT Technologies Reports results for the Second Quarter of 2022

About this update from Tat Technologies Ltd.

NETANYA, Israel , Aug. 30, 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 and six-month periods ended June 30, 2022 . Key Financial Highlights: Revenues for the six-month period that ended on June 30, 2022 increased by 2% to $40.7 million compared with $39.9 million in the six-month period that ended on June 30, 2021 . Revenues for Q2 2022 were $20.8 million , a decrease of 3.7% compared with $21.6 million in Q2 2021. Gross profit for Q2 2022 was $4 million (19.4% as a percentage of revenues) an increase of 27.8% compared with $3.2 million (14.6% as a percentage of revenues) in Q2 2021. Gross profit for the six-month period that ended on June 30, 2022 was $7.1 million (17.4% as a percentage of revenues) an increase of 8.1% compared with $6.6 million (16.4% as a percentage of revenues) in the six-month period that ended on June 30, 2021 . Adjusted EBITDA for Q2 2022 doubled to $0.9 million compared with $0.4 million in Q2 2021. Adjusted EBITDA for the six-month period that ended on June 30, 2022 was $1.4 million compared with $2.0 million in the six-month period that ended on June 30, 2021 . During the first six months of 2021 the company received grants (which were recorded as a decrease of expenses) in the value of $1.9M . Adjusted EBITDA excluding grants increased by $1.3M to $1.4M in the six month period that ended on June 30 2022 compared with $0.1M in the six month period that ended on June 30, 2021 (for more details see the proforma comparison below) Net loss in Q2\22 was ($0.1) million , or loss of ( $0.01 ) per diluted share, compared with a net loss of ($2.5) million , or loss of ( $0.3 ) per diluted share, in Q2\21. For the six-month period that ended on June 30, 2022 , net loss was ($1.7) million , or loss of ( $0.2 ) per diluted share compared with a net loss of ($1.9) million , or $(0.2) per diluted share in the six-month period that ended on June 30, 2021 . Net loss for Q2\22 and for the six-months period that ended on June 30, 2022 include restructuring expenses of $0.8 million and $1.7 million , respectively. Proforma results comparison, representing 2021 without grants: Thousands USD Q2\22 Q2\21 H1\22 H1\21 Revenues 20,775 21,585 40,730 39,945 COGS 16,743 19,847 33,652 34,990 Gross Profit 4,032 1,738 7,078 4,955 GM 19.4 % 8.1 % 17.4 % 12.4 % R&D & SG&M 4,191 4,258 7,884 7,221 EBITDA 886 (1,330) 1,393 69 Mr. Igal Zamir , TAT's CEO and President commented on the results: "The financial results of the second quarter of 2022 represent a continuous improvement in our results compared to the previous quarter and compared to the same period in 2021. During Q2 of 2022 we managed to increase revenues, improve our gross profit and gross margin and improve our operational cash flow compared to Q1 of 2022. Part of this improvement is a result of cost cutting measures that are part of our restructuring plan. Global supply chain issues continue to affect our business and results. We continue to make enormous efforts to meet our customers' needs at a time when demand post the COVID-19 pandemic is picking up, but materials and components availability is still problematic". Mr. Zamir continued: "During this quarter we signed a five-year agreement with one of the world's largest cargo companies with expected revenues of $50 million over this period. This agreement already contributes revenues and will be part of our growth plan for Q3\22. We continue to work on other opportunities that may result from the strategic agreements that we signed with Honeywell last year". 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, discontinued operation, financial (expenses) income, net, 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 OfficerTel: 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 , 2022 2021 (unaudited) (audited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 8,336 $ 12,872 Accounts receivable, net 14,490 13,887 Inventory, net 44,220 41,003 Other current assets and prepaid expenses 4,659 4,219 Total current assets 71,705 71,981 NON-CURRENT ASSETS: Restricted deposit 307 343 Investment in affiliates 1,571 695 Funds in respect of employee rights upon retirement 824 1,157 Deferred income taxes 1,333 1,252 Intangible assets, net 1,727 1,829 Property, plant and equipment, net 35,991 30,462 Operating lease right of use assets 2,954 3,114 Total non-current assets 44,707 38,852 Total assets $ 116,412 $ 110,833 LIABILITIES AND EQUITY CURRENT LIABILITIES: Current maturities of long-term loans 1,463 $ 691 Credit line from bank 3,017 6,008 Accounts payable 8,062 9,093 Accrued expenses 7,014 6,959 Operating lease liabilities 774 1,169 Provision for restructuring plan 1,114 657 Total current liabilities 21,444 24,577 NON CURRENT LIABILITIES: Long-term loans 16,533 5,979 Liability in respect of employee rights upon retirement 1,178 1,504 Operating lease liabilities 2,137 1,989 Total non-current liabilities 19,848 9,472 Total liabilities $ 41,292 $ 34,049 EQUITY: Share capital 2,820 2,809 Additional paid-in capital 66,038 65,871 Treasury stock at cost (2,088) (2,088) Accumulated other comprehensive income (115) 33 Retained earnings 8,465 10,159 Total shareholders' equity 75,120 76,784 Total liabilities and shareholders' equity $ 116,412 $ 110,833 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 , 2022 2021 2022 2021 2021 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) Revenues: Products $ 7,144 $ 8,801 $ 13,463 $ 12,954 $ 25,870 Services 13,631 12,784 27,267 26,991 52,103 20,775 21,585 40,730 39,945 77,973 Cost of goods: Products 5,826 7,527 11,569 11,138 23,761 Services 10,917 10,905 22,083 22,257 42,942 16,743 18,432 33,652 33,395 66,703 Gross Profit 4,032 3,153 7,078 6,550 11,270 Operating expenses: Research and development, net 180 136 153 271 517 Selling and marketing 1,517 1,458 2,852 2,663 5,147 General and administrative 2,494 2,309 4,879 3,932 8,354 Other income (9) - (90) - (468) Restructuring expenses 775 1,897 1,703 2,417 1,755 4,957 5,800 9,497 9,283 15,305 Operating loss (925) (2,647) (2,419) (2,733) (4,035) Financial income (expenses), net 508 (257) 574 140 (540) Income (loss) before taxes on income (tax benefit) (417) (2,904) (1,845) (2,593) (4,575) Taxes on income (tax benefit) (170) (140) (63) (272) (662) Income (loss) before share of equity investment (247) (2,764) (1,782) (2,321) (3,913) Share in results of affiliated companies 115 (26) 88 (38) (76) Net income (loss) from continued operation $ (132) $ (2,790) $ (1,694) $ (2,359) $ (3,989) Net income from discontinued operation - $ 307 - $ 463 $ 427 Net loss $ (132) $ (2,483) $ (1,694) $ (1,896) $ (3,562) Basic and diluted income per share Net income (loss) per share basic and diluted from continued operation $ (0. 01) $ (0.31) $ (0.19) $ (0.26) $ (0.45) Net income per share basic and diluted from discontinued $ - $ 0.03 $ - $ 0.05 $ 0.05 Net income (loss) per share basic and diluted $ (0.01) $ (0.28) $ (0.19) $ (0.21) $ (0.4) Weighted average number of shares outstanding Basic 8,886,546 8,874,696 8,886,546 8,874,696 8,874,696 Diluted 8,886,546 8,874,696 8,886,546 8,874,696 8,874,696 TAT TECHNOLOGIES AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Three months ended Six months ended Year ended June 30 , December 31 , 2022 2021 2022 2021 2021 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) Net loss $ (132) $ (2,483) $ (1,694) $ (1,896) $ (3,562) Other comprehensive income Net unrealized income from derivatives (116) 15 (148) (128) (76) Reclassification adjustments for gains (losses) included in net income and inventory - - - - (19) Total comprehensive income (loss) $ (248) $ (2,468) $ (1,842) $ (2,024) $ (3,657) 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, 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 JUNE 30, 2022 (unaudited): Comprehensive loss - - - (148) - (1,694) (1,842) Exercise of option 11,850 11 56 - - - 67 Share based compensation - - 111 - - - 111 BALANCE AT JUNE 30, 2022 (unaudited) 9,161,019 $ 2,820 $ 66,038 $ (115) $ (2,088) 8,465 $ 75,120 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 , 2022 2021 2022 2021 2021 (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited) CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (132) $ (2,790) $ (1,694) $ (2,359) $ (3,989) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 926 1,081 1,899 2,137 4,881 Loss (gain) from change in fair value of derivatives (9) (6) 8 (15) (19) Provision for doubtful accounts (45) 42 (45) 42 248 Share in results of equity investment of affiliated Company (115) 26 (88) 38 76 Share based compensation 62 32 111 58 160 Non cash finance (income) expense (777) 209 (972) (331) (65) Lease modification - - - - (1,315) Increase (decrease) in provision for restructuring expenses 802 (63) 457 470 657 Liability in respect of employee rights upon retirement (209) 137 (326) 10 94 Impairment of fixed assets - 1,800 - 1,800 1,820 Capital gain from sale of fixed assets (9) - (90) (468) Deferred income taxes, net (188) (144) (81) (280) (686) Government loan forgiveness - - - (1,443) (1,442) Changes in operating assets and liabilities: Decrease (increase) in trade accounts receivable (451) (1,900) (1,346) (3,473) (2,934) Decrease (increase) in other current assets and prepaid expenses (81) (1,202) (60) (1,383) (959) Decrease (increase) in inventory (1,143) 651 (3,365) 1,449 (681) Increase (decrease) in trade accounts payable (1,428) 1,484 (892) 1,494 2,571 Increase (decrease) in accrued expenses 161 (256) 119 304 (218) Net cash provided by operating activities $ (2,636) $ (899) $ (6,365) $ (1,482) $ (2,269) CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of property and equipment 9 - 93 - 1,163 Purchase of property and equipment (3,575) (1,962) (7,585) (9,567) (16,247) Purchase of intangible assets - (259) - (544) (555) Cash flows used in investing activities $ (3,566) $ (2,221) $(7,492) $(10,111) $ (15,639) CASH FLOWS FROM FINANCING ACTIVITIES: Loans and credit line received (repayment) from banks (261) - (3,261) 3,000 3,000 Proceeds from long-term loans received 1,976 - 12,480 3,042 3,042 Exercise of options - - 67 - - Cash flows provided by financing activities $ 1,715 $ - $9,286 $6,042 $ 6,042 Cash flows from discontinued Activities: Net profit (loss) from discontinued operation $- $63 $- $219 $ 777 Net cash provided by (used in) discontinued activities $ - $ 63 $ - $ 219 $ 777 Net increase (decrease) in cash and restricted cash (4,487) (3,057) (4,571) (5,332) (11,089) Cash and restricted cash at beginning of period 13,131 22,029 13,215 24,304 24,304 Cash and restricted cash at end of period $ 8,644 $ 18,972 $ 8,644 $ 18,972 $ 13,215 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 , 2022 2021 2022 2021 2021 Net loss $ (132) $ (2,483) $ (1,694) $ (1,896) $ (3,562) Adjustments: Share in results of equity investment of affiliated companies (115) 26 (88) 38 76 Taxes on income (tax benefit) (170) (140) (63) (272) (662) Financial expenses (income), net (508) 257 (574) (140) 540 Depreciation and amortization 974 1,158 1,998 2,265 5,420 Restructuring expenses 775 1,897 1,703 2,430 1,755 Discontinued operation income - (307) - (463) (427) Share based compensation 62 32 111 58 160 Adjusted EBITDA $ 886 $ 440 $ 1,393 $ 2,020 $ 3,300 View original content: https://www.prnewswire.com/news-releases/tat-technologies-reports-results-for-the-second-quarter-of-2022-301614771.html SOURCE TAT Technologies Ltd

View stock analysis, news, and events for Tat Technologies Ltd.