TAT Technologies Reports Continued Improvement in Profitability and Revenue Growth in Q2 2017
GEDERA, Israel, Aug. 13, 2017 /PRNewswire/ -- TAT Technologies Ltd. (NASDAQ: TATT - News) ("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, 2017.
Key Financial Highlights:
-- Revenues for Q2 2017 were $26.6 million compared with $23.5 million in
Q2 2016, a 13.2% growth. Revenues for H1 2017 were $53.6 million
compared with $47.2 million in H1 2016, a 13.6% growth.
-- Profitability showed significant improvement, both quarter-over-quarter
and first half-over-first half:
-- Adjusted EBITDA for Q2 2017 increased to $2.4 million compared with
$1.2 million in Q2 2016, an increase of 100%. Adjusted EBITDA for H1
2017 increased to $5.3 million compared with $2.3 million in H1
2016, an increase of 130%.
-- The Company achieved GAAP net income of $0.6 million, or $0.07 per
diluted share in Q2 2017, compared with a loss of $(2.5) million, or
$(0.28) per diluted share, in Q2 2016.
-- Non-GAAP net income reached $0.8 million, or $0.09 per diluted share
in Q2 2017, compared with a loss of $(0.1) million, or $(0.01) per
diluted share in Q2 2016.
-- Last Twelve Months ("LTM") results for the period ended June 30, 2017
improved with revenues of $102.3 million compared to $90.8 million in
the LTM period ended June 30, 2016, a growth of 12.7%. Adjusted EBITDA
for the LTM period ended June 30, 2017 was $10.9 million compared to
$2.5 million in the LTM period ended June 30, 2016, a growth of 336%.
Mr. Igal Zamir, CEO and President of TAT Technologies stated, "Our second quarter results reflect the continued implementation of the Company's plan to improve efficiencies and cost reduction. This is the fourth consecutive quarter in which we demonstrate consistent and significant improvement resulting from streamlining operations, leveraging additional synergies between our various business activities and having certain new marketing processes. In addition, we are systematically focusing on tenders that guarantee present profitability compared to those that characterized our past activities, as reflected in the change of our product mix."
Mr. Zamir added, "The aviation industry is benefiting from an increase in fleet sizes as well as passenger traffic on the one hand and low fuel prices on the other; we are working to leverage these trends in order to strengthen our business and competitive position. We are thrilled that the 14% sales growth was achieved concurrently with a decrease in operating expenses, resulting in Adjusted EBITDA doubling in the first six months of 2017 compared to the comparable period in 2016. The Adjusted EBITDA ratio also grew to more than 9% of total revenues during this period. We believe that our long term strategy will enable TAT to better utilize business opportunities and maintain our growth momentum."
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, and depreciation and amortization. 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 pages 7 and 11 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
Guy Nathanzon, CFO
TAT Technologies Ltd.
Tel: +972-8-862-8500
guyn@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)
June 30, December 31,
2017 2016
---- ----
(unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $20,096 $21,433
Short-term bank deposits 464 964
Accounts receivable, net 22,819 21,572
Other current assets and prepaid
expenses 3,020 1,687
Inventory, net 36,406 39,269
------ ------
Total current assets 82,805 84,925
------ ------
NON-CURRENT ASSETS:
Investment in affiliates 1,164 1,019
Funds in respect of employee rights
upon retirement 2,816 2,660
Deferred income taxes 1,032 896
Intangible assets, net 1,112 1,179
Property, plant and equipment, net 20,902 21,298
------ ------
Total non-current assets 27,026 27,052
------ ------
Total assets $109,831 $111,977
======== ========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable 7,120 8,406
Accrued expenses 9,453 9,836
Total current liabilities 16,573 18,242
------ ------
NON CURRENT LIABILITIES:
Other long-term liabilities 176 151
Liability in respect of employee
rights upon retirement 3,164 2,994
Deferred income taxes 1,790 1,938
-----
Total non-current liabilities 5,130 5,083
----- -----
Total liabilities 21,703 23,325
------ ------
EQUITY:
Share capital 2,797 2,797
Additional paid-in capital 64,875 64,760
Treasury stock at cost (2,088) (2,088)
Accumulated other comprehensive loss 476 (73)
Retained earnings 22,068 23,256
------ ------
Total shareholders' equity 88,128 88,652
Total liabilities and shareholders'
equity $109,831 $111,977
======== ========
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,
-------- ------------
2017 2016 2017 2016 2016
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Revenues:
Products $9,369 $7,941 $18,919 $16,010 $30,431
Services 17,199 15,589 34,730 31,154 65,363
------ ------ ------ ------ ------
26,568 23,530 53,649 47,164 95,794
------ ------ ------ ------ ------
Cost of goods:
Products 7,532 6,341 14,443 13,032 23,788
Services 13,993 12,794 28,606 25,802 52,969
------ ------ ------ ------ ------
21,525 19,135 43,049 38,834 76,757
------ ------ ------ ------ ------
Gross Profit 5,043 4,395 10,600 8,330 19,037
----- ----- ------ ----- ------
Operating expenses:
Research and development, net 176 474 405 738 1,140
Selling and marketing 1,296 947 2,438 1,957 3,876
General and administrative 2,239 2,682 4,506 5,092 10,023
Other loss (income) - (4) 28 (3) (138)
3,711 4,099 7,377 7,784 14,901
----- ----- ----- ----- ------
Operating income 1,332 296 3,223 546 4,136
----- --- ----- --- -----
Financial expenses, net (100) (13) (272) (32) (154)
---- --- ---- --- ----
Income before taxes on income 1,232 283 2,951 514 3,982
Taxes on income 535 2,722 1,033 2,908 3,865
--- ----- ----- ----- -----
Income (loss) before equity
investment 697 (2,439) 1,918 (2,394) 117
Share in results of affiliated
companies (86) (14) (106) (14) (55)
Net income (loss) $611 $(2,453) $1,812 $(2,408) $62
Basic and diluted income (loss) per share
Net income (loss) per share $0.07 $(0.28) $0.21 $(0.27) $0.01
===== ====== ===== ====== =====
Weighted average number of shares
outstanding
Basic 8,828,444 8,828,444 8,828,444 8,828,444 8,828,444
Diluted 8,832,080 8,828,444 8,892,756 8,828,444 8,830,764
========= ========= ========= ========= =========
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
(In thousands)
Three months ended Six months ended Year ended
------------------ ---------------- ----------
June 30, December 31,
-------- ------------
2017 2016 2017 2016 2016
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Net income (loss) $611 $(2,453) $1,812 $(2,408) $62
Other comprehensive income
Net unrealized gains (losses) from
derivatives (227) (173) (324) 192 174
Reclassification adjustments for gains
included in net income and inventory 336 (74) 873 (121) (243)
--- --- --- ---- ----
Total other comprehensive income (loss) $720 $(2,700) $2,361 $(2,337) $(7)
==== ======= ====== ======= ===
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP RESULTS (UNAUDITED)
-----------------------------------------------------
(In thousands, except share and per share data)
Three months ended
------------------
June 30,
--------
2017 2016
---- ----
Reported net income (loss) on GAAP
basis $611 $(2,453)
Adjustments:
Tax adjustments re non-GAAP - 2,360
adjustments (1)
Share in results of equity
investment of 86 14
affiliated company
Share based compensation 58 13
--- ---
Non-GAAP net income (loss) $755 $(66)
==== ====
Non-GAAP net income per share
(loss) $0.09 $(0.01)
===== ======
Weighted average number of shares
outstanding
Basic 8,828,444 8,828,444
Diluted 8,832,080 8,828,444
(1) During the second quarter of 2016 the Company distributed dividend from its foreign subsidiaries earnings. As a result, the company accrued deferred tax liability due to actual distribution of earnings from foreign subsidiaries of the Company and due to the possibility of future distribution of earnings from such foreign subsidiaries.
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, 2014
(audited) 9,082,817 $2,793 $64,491 $ - $(2,088) $20,345 $85,541
CHANGES DURING THE YEAR ENDED
DECEMBER 31, 2015 (audited):
Comprehensive income (loss) - - - (4) - 5,849 5,845
Share based compensation expenses - - 38 - - - 38
--- --- --- --- --- --- ---
BALANCE AT DECEMBER 31, 2015
(audited) 9,082,817 2,793 64,529 (4) (2,088) 26,194 91,424
CHANGES DURING THE YEAR ENDED
DECEMBER 31, 2016 (audited):
Comprehensive income (loss) - - - (69) - 62 (7)
Share based compensation expenses - - 105 - - - 105
Exercise of option 20,100 4 126 - - - 130
Dividend distributed - - - - - (3,000) (3,000)
--- --- --- --- --- ------ ------
BALANCE AT DECEMBER 31, 2016
(audited) 9,102,917 2,797 64,760 (73) (2,088) 23,256 88,652
CHANGES DURING THE SIX MONTHS
ENDED JUNE 30, 2017 (unaudited):
Comprehensive income - - - 549 - 1,812 2,361
Dividend distributed - - - - - (3,000) (3,000)
Share based compensation expenses - - 115 - - - 115
--- --- --- --- --- --- ---
BALANCE AT JUNE 30, 2017
(unaudited) 9,102,917 $2,797 $64,875 $476 $(2,088) $22,068 $88,128
--------- ------ ------- ---- ------- ------- -------
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,
-------- ------------
2017 2016 2017 2016 2016
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)
attributable to TAT $611 $(2,453) $1,812 $(2,408) $62
Technologies Ltd.
shareholders
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Depreciation and
amortization 980 880 1,949 1,731 3,636
Loss on sale of property,
plant and equipment - - 28 1 12
Interest from short-term
bank deposits and - - (11) (24)
restricted deposits
Loss (gain) from change in
fair value of (43) 5 (60) (48) (152)
derivatives
Provision for doubtful
accounts 19 - 38 43 (29)
Share in results and sale of
equity investment of 86 14 106 14 55
affiliated Company
Share based compensation 58 13 115 27 105
Liability in respect of
employee rights upon 68 (5) 170 13 123
retirement
Deferred income taxes, net (342) 2,218 (284) 2,100 1,670
Changes in operating assets
and liabilities:
Increase in trade accounts
receivable (1,820) (2,060) (1,285) (3,497) (2,392)
Decrease (increase) in other
current assets and 324 1,480 (618) 944 1,487
prepaid expenses
Decrease (increase) in
inventory 1,407 (677) 2,672 (505) (2,707)
Increase (decrease) in trade
accounts payable 67 (551) (1,371) (124) 1,192
Increase (decrease) in
accrued expenses (1,613) (207) (383) 345 2,521
Increase (decrease) in other
long-term liabilities (11) 25 25 (122) (38)
--- --- --- ---- ---
Net cash provided by (used
in) operating $(209) $(1,318) $2,914 $(1,497) $5,521
activities
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment in affiliated
company (164) (13) (251) (13) (905)
Funds in respect of employee
rights upon (35) 117 (71) (23) 2
retirement
Proceeds from sale of
property and equipment 1 17
Purchase of property and
equipment (809) (2,915) (1,429) (3,583) (5,702)
Maturities of short-term
deposits 500 - 500 2,000 7,182
--- --- --- ----- -----
Cash flows provided by (used
in) investing $(508) $(2,811) $(1,251) $(1,618) $594
activities
CASH FLOWS FROM FINANCING
ACTIVITIES:
Realization of contingency - - - - (500)
Payment of cash dividend (3,000) - (3,000) - (3,000)
Exercise of options - - - 130 130
--- --- --- --- ---
Cash flows provided by
(used in) financing $(3,000) $ - (3,000) $130 $(3,370)
activities
Net increase (decrease) in
cash and cash (3,717) (4,129) (1,337) (2,985) 2,745
equivalents
Cash and cash equivalents at
beginning of 23,813 19,832 21,433 18,688 18,688
period
Cash and cash equivalents at
end of period $20,096 $15,703 $20,096 $15,703 $21,433
------- ------- ------- ------- -------
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP)
(UNAUDITED)
----------
(In thousands)
Three months ended Six months ended Twelve months
ended
------------------ ---------------- --------------
June 30, June 30, June 30,
-------- -------- --------
2017 2016 2017 2016 2017 2016
---- ---- ---- ---- ---- ----
Net income (loss) $611 $(2,453) $1,812 $(2,408) $4,282 $767
Adjustments:
Share in results and sale of
equity 86 14 106 14 147 268
investment of affiliated
companies
Taxes on income 535 2,722 1,033 2,908 1,990 2,770
Financial expenses, net 100 13 272 32 394 132
Gain on bargain purchase - - - - - (4,833)
Depreciation and amortization 980 880 1,949 1,731 3,854 3,297
Share based compensation 58 13 115 27 193 50
--- --- --- --- --- ---
Adjusted EBITDA $2,370 $1,189 $5,287 $2,304 $10,860 $2,451
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SOURCE TAT Technologies Ltd
