TAT Technologies Reports Continued Improvement in Q3 2017
GEDERA, Israel, Nov. 15, 2017 /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 nine-month periods ended September 30, 2017.
Key Financial Highlights:
-- Revenues for the nine-month period that ended on September 30, 2017 were
$80.2 million compared with $70.8 million in the nine-month period that
ended on September 30, 2016, a 13% growth. Revenues for Q3/17 were $26.6
million compared with $23.6 million in Q3/16, a 12% growth.
-- Adjusted EBITDA for the nine-month period that ended on September 30,
2017 increased to $7.8 million compared with $4.8 million in the
nine-month period that ended on September 30, 2016, an increase of 64%.
Adjusted EBITDA for Q3/17 was $2.5 million compared with $2.5 million in
Q3/16.
-- The Company achieved GAAP net income of $2.7 million, or $0.30 per
diluted share in the nine-month period that ended on September 30, 2017
compared with a net loss of $1.6 million, or a loss of $0.18 per diluted
share in the nine-month period that ended on September 30, 2016. GAAP
net income for Q3/17 was $0.8 million, or $0.10 per diluted share
compared with GAAP net income of $0.9 million, or $0.10 per diluted
share in Q3/16.
-- Non-GAAP net income reached $3.0 million, or $0.33 per diluted share in
the nine-month period that ended on September 30, 2017, compared with
non-GAAP net income of $0.9 million, or $0.10 per diluted share in the
nine-month period that ended on September 30, 2016, and non-GAAP net
income of $0.9 million, or $0.10 per diluted share in Q3/17 and in
Q3/16.
Mr. Igal Zamir, CEO and President of TAT Technologies stated, "We continue to see consistent improvement in the company's financial performance. Revenues continue to grow organically due to the company's sales and marketing efforts, its strong position in its markets and the continued strength in the Aerospace industry. The company is expected to start deliveries related to the recently awarded APU MRO contract during Q4/17. Operational improvements that have been implemented resulted in solid and stable profitability. The company continues to pursue growth initiatives, both organic and strategic and further improve its profitability."
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 and/or (3) share in results of equity investment of affiliated companies. 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. 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 9 and 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:
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)
September 30, December 31,
2017 2016
---- ----
(unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $18,315 $21,433
Short-term bank deposits 464 964
Accounts receivable, net 26,004 21,572
Other current assets and prepaid expenses 3,336 1,687
Inventory, net 37,623 39,269
------ ------
Total current assets 85,742 84,925
------ ------
NON-CURRENT ASSETS:
Investment in affiliates 1,247 1,019
Funds in respect of employee rights upon retirement 2,889 2,660
Deferred income taxes 916 896
Intangible assets, net 1,079 1,179
Property, plant and equipment, net 21,108 21,298
------ ------
Total non-current assets 27,239 27,052
------ ------
Total assets $112,981 $111,977
======== ========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable 9,882 8,406
Accrued expenses 8,752 9,836
Total current liabilities 18,634 18,242
------ ------
NON CURRENT LIABILITIES:
Other long-term liabilities 163 151
Liability in respect of employee rights upon retirement 3,354 2,994
Deferred income taxes 2,015 1,938
-----
Total non-current liabilities 5,532 5,083
----- -----
Total liabilities 24,166 23,325
------ ------
EQUITY:
Share capital 2,802 2,797
Additional paid-in capital 65,050 64,760
Treasury stock at cost (2,088) (2,088)
Accumulated other comprehensive loss 142 (73)
Retained earnings 22,909 23,256
------ ------
Total shareholders' equity 88,815 88,652
Total liabilities and shareholders' equity $112,981 $111,977
======== ========
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(In thousands, except share and per share data)
Three months ended Nine months ended Year ended
------------------ ----------------- ----------
September 30, December 31,
------------- ------------
2017 2016 2017 2016 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Revenues:
Products $8,985 $6,940 $27,904 $22,950 $30,431
Services 17,596 16,705 52,326 47,859 65,363
------ ------ ------ ------ ------
26,581 23,645 80,230 70,809 95,794
------ ------ ------ ------ ------
Cost of goods:
Products 7,557 5,147 22,000 18,179 23,788
Services 13,930 13,605 42,536 39,407 52,969
------ ------ ------ ------ ------
21,487 18,752 64,536 57,586 76,757
------ ------ ------ ------ ------
Gross Profit 5,094 4,893 15,694 13,223 19,037
----- ----- ------ ------ ------
Operating expenses:
Research and development, net 215 213 620 951 1,140
Selling and marketing 1,205 911 3,643 2,868 3,876
General and administrative 2,182 2,300 6,688 7,392 10,023
Other loss (income) (1) (18) 27 (21) (138)
3,601 3,406 10,978 11,190 14,901
----- ----- ------ ------ ------
Operating income 1,493 1,487 4,716 2,033 4,136
Financial income (expenses), net 21 (60) (251) (92) (154)
--- --- ---- --- ----
Income before taxes on income 1,514 1,427 4,465 1,941 3,982
Taxes on income 623 537 1,656 3,445 3,865
--- --- ----- ----- -----
Income (loss) before equity investment 891 890 2,809 (1,504) 117
Share in results of affiliated companies (50) (37) (156) (51) (55)
Net income (loss) $841 $853 $2,653 $(1,555) $62
Basic and diluted income (loss) per share
Net income (loss) per share (basic and diluted) $0.10 $0.10 $0.30 $(0.18) $0.01
Weighted average number of shares outstanding
Basic 8,848,028 8,828,444 8,848,028 8,828,444 8,828,444
Diluted 8,924,358 8,837,714 8,920,054 8,829,894 8,830,764
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
(In thousands)
Three months ended Nine months ended Year ended
------------------ ----------------- ----------
September 30, December 31,
------------- ------------
2017 2016 2017 2016 2016
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Net income (loss) $841 $853 $2,653 $(1,555) $62
Other comprehensive income
Net unrealized gains (losses) from derivatives (221) 181 (545) 373 174
Reclassification adjustments for gains included in net income and inventory (113) (93) 760 (214) (243)
---- --- --- ---- ----
Total other comprehensive income (loss) $507 $941 $2,868 $(1,396) $(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 Nine months ended
------------------ -----------------
September 30,
-------------
2017 2016 2017 2016
Reported net income (loss) on GAAP basis $2,653 $(1,555)
$841 $853
Adjustments:
Tax adjustments re non-GAAP adjustments (1) - - - 2,360
Share in results of equity investment of affiliated company 156 51
50 37
Share based compensation 36 37 151 64
--- --- --- ---
Non-GAAP net income $927 $927 $2,960 $920
==== ==== ====== ====
Non-GAAP net income per share (basic and diluted) $0.33 $0.10
$0.10 $0.10
===== =====
Weighted average number of shares outstanding
Basic 8,848,028 8,828,444 8,848,028 8,828,444
Diluted 8,924,358 8,837,714 8,920,054 8,829,894
========= ========= ========= =========
(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 Amount Additional paid-in capital other comprehensive income (loss) Treasury shares Retained earnings Total equity
shares issued
-------------
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 options 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 NINE MONTHS ENDED
SEPTEMBER 30, 2017 (unaudited):
Comprehensive income - - - 215 - 2,653 2,868
Exercise of options 19,584 5 139 - - - 144
Dividend distributed - - - - - (3,000) (3,000)
Share based compensation expenses - - 151 - - - 151
--- --- --- --- --- --- ---
BALANCE AT SEPTEMBER 30, 2017 (unaudited): 9,122,501 $2,802 $65,050 $142 $(2,088) $22,909 $88,815
========= ====== ======= ==== ======= ======= =======
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(In thousands)
Three months ended Nine months ended Year ended
------------------ ----------------- ----------
September 30, December 31,
------------- ------------
2017 2016 2017 2016 2016
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) attributable to TAT Technologies Ltd. shareholders $841 $853 $2,653 $(1,555) $62
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 987 929 2,936 2,660 3,636
Loss (gain) on sale of property, plant and equipment - (19) 28 (18) 12
Interest from short-term bank deposits and restricted deposits - - - (11) (24)
Gain from change in fair value of derivatives (40) (122) (100) (170) (152)
Provision for doubtful accounts - 10 38 53 (29)
Share in results of equity investment of affiliated Company 50 37 156 51 55
Share based compensation 36 37 151 64 105
Liability in respect of employee rights upon retirement 190 47 360 60 123
Deferred income taxes, net 341 (287) 57 1,813 1,670
Changes in operating assets and liabilities:
Increase in trade accounts receivable (3,185) (44) (4,470) (3,541) (2,392)
Decrease (increase) in other current assets and prepaid expenses (521) (913) (1,138) 31 1,487
Decrease (increase) in inventory (1,353) (862) 1,319 (1,367) (2,707)
Increase in trade accounts payable 2,805 1,503 1,433 1,379 1,192
Increase (decrease) in accrued expenses (701) 1,013 (1,084) 1,358 2,521
Increase (decrease) in other long-term liabilities (13) (1) 12 (123) (38)
--- --- --- ---- ---
Net cash provided by (used in) operating activities $(563) $2,181 $2,351 $684 $5,521
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in affiliated company (133) (376) (384) (389) (905)
Funds in respect of employee rights upon retirement (26) 98 (97) 75 2
Proceeds from sale of property and equipment - 17 - 18 17
Purchase of property and equipment (1,203) (1,078) (2,632) (4,661) (5,702)
Maturities of short-term deposits - 5,182 500 7,182 7,182
--- ----- --- ----- -----
Cash flows provided by (used in) investing activities $(1,362) $3,843 $(2,613) $2,225 $594
CASH FLOWS FROM FINANCING ACTIVITIES:
Realization of contingency - (500) - (500) (500)
Payment of cash dividend - (3,000) (3,000) (3,000) (3,000)
Exercise of options 144 144 130 130
--- --- --- ---
Cash flows provided by (used in) financing activities $144 $(3,500) $(2,856) $(3,370) $(3,370)
---- ------- ------- ------- -------
Net increase (decrease) in cash and cash equivalents (1,781) 2,524 (3,118) (461) 2,745
Cash and cash equivalents at beginning of period 20,096 15,703 21,433 18,688 18,688
------ ------ ------ ------ ------
Cash and cash equivalents at end of period $18,315 $18,227 $18,315 $18,227 $21,433
------- ------- ------- ------- -------
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP) (UNAUDITED)
---------------------------------------------------------------------
(In thousands)
Three months ended Nine months ended
------------------ -----------------
September 30, September 30,
------------- -------------
2017 2016 2017 2016
Net income (loss) $841 $853 $2,653 $(1,555)
Adjustments:
Share in results of equity
investment of affiliated
companies 50 37 156 51
Taxes on income 623 537 1,656 3,445
Financial expenses (income),
net (21) 60 251 92
Depreciation and amortization 987 929 2,936 2,660
Share based compensation 36 37 151 64
--- --- --- ---
Adjusted EBITDA $2,516 $2,453 $7,803 $4,757
====== ====== ====== ======
Guy Nathanzon, CFO
TAT Technologies Ltd.
Tel: 972-8-862-8500
guyn@tat-technologies.com
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SOURCE TAT Technologies Ltd
