TAT Technologies Reports Second Quarter 2023 Results

About this update from Tat Technologies Ltd.

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 H 1 of 202 3 : · 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 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 , 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 , 202 0 9,149,169 $ 2,809 $ 65,711 $ 128 $ (2,088) $ 13,721 $ 80,281 CHANGES DURING THE YEAR ENDED DECEMBER 31 , 202 1 : Comprehensive loss - - - (95) - (3,562) (3,657) Share based compensation - - 160 - - - 160 BALANCE AT DECEMBER 31 , 202 1 9,149,169 $ 2,809 $ 65,871 $ 33 $ (2,088) $ 10,159 $ 76,784 CHANGES DURING THE YEAR ENDED DECEMBER 31 , 202 2 : Comprehensive loss - - - (59) - (1,562) (1,621) Exercise of option 36,850 33 156 - - - 189 Share based compensation - - 218 - - - 218 BALANCE AT DECEMBER 31 , 20 22 9,186,019 $ 2,842 $ 66,245 $ (26) $ (2,088) $ 8,597 $ 75,570 CHANGES DURING THE PERIOD ENDED JUNE 30 , 202 3 (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 , 202 3 (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 View original content: https://www.prnewswire.com/news-releases/tat-technologies-reports-second-quarter-2023-results-301913125.html SOURCE TAT Technologies Ltd.

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