TAT Technologies Reports Record Results for Fiscal Year 2017
TAT Technologies Reports Record Results for Fiscal Year 2017
Annual Revenue of $106.5 Million Represent an All Time High and Adjusted EBITDA of $9.4 Million Represent the Highest Recorded Since 2009
Revenues grew 5% and 11% in the quarter and year ended December 31, 2017 compared to the comparable period in 2016, respectively
Adjusted EBITDA grew 19% in the year ended December 31, 2017, compared to the year ended December 31, 2016
GEDERA, Israel, March 27, 2018 /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 fourth quarter and year ended December 31, 2017.
Key Financial Highlights:
-- Record revenues of $106.5 million for the year ended December 31, 2017,
compared with $95.8 million in the year ended December 31, 2016, an 11%
growth. Revenues for the fourth quarter were $26.3 million compared with
$25.0 million in the comparable quarter last year, a 5% growth.
-- Adjusted EBITDA for the year ended December 31, 2017 increased to $9.4
million compared with $7.9 million in the year ended December 31, 2016,
an increase of 19%. 2017 adjusted EBITDA is the highest recorded
adjusted EBITDA since 2009. Adjusted EBITDA for fourth quarter was $1.6
million compared with $3.1 million in the comparable quarter last year.
-- GAAP net income reached $2.4 million, or $0.27 per diluted share in the
year ended December 31, 2017, compared with a net income of $0.1
million, or $0.01 per diluted share in the year ended December 31, 2016.
GAAP net loss for the fourth quarter was $0.3 million, or $0.03 per
diluted share compared with GAAP net income of $1.6 million, or $0.18
per diluted share in fourth quarter of 2016.
-- Non-GAAP net income totaled $2.8 million, or $0.31 per diluted share in
the year ended December 31, 2017, compared with non-GAAP net income of
$2.8 million, or $0.32 per diluted share in the year ended December 31,
2016, and non-GAAP net loss of $0.2 million, or $0.02 per diluted share
in the fourth quarter of 2017 compared with non-GAAP net income of $1.8
million, or $0.20 per diluted share in the fourth quarter of 2016.
Mr. Igal Zamir, CEO and President of TAT Technologies stated, "2017 was a record year for TAT Technologies. Our revenues which grew 11% year over year, reached a record high, while adjusted EBITDA grew 19%, the highest recorded adjusted EBITDA since 2009. These strong record results serve as yet another proof point of our successful growth strategy and effective operational improvement plan. We are well positioned in our markets and have a strong balance sheet which together serve as the foundation for our long-term growth. We continue to pursue new growth initiatives, both organic and strategic, which we expect will drive our growth in 2018 and beyond."
Mr. Zamir added, "I would like to take this opportunity to thank all of TAT's employees around the world. Their talent, hard work and dedication are key to our ability to successfully implement our growth strategy and create long term value for our shareholders."
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) 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.
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)
December 31, December 31,
2017 2016
---- ----
(unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $17,514 $21,433
Short-term bank deposits 470 964
Accounts receivable, net 25,744 21,572
Other current assets and prepaid
expenses 2,363 1,687
Inventory, net 38,630 39,269
------ ------
Total current assets 84,721 84,925
------ ------
NON-CURRENT ASSETS:
Investment in affiliates 1,192 1,019
Funds in respect of employee rights
upon retirement 2,779 2,660
Deferred income taxes 937 896
Intangible assets, net 1,045 1,179
Property, plant and equipment, net 21,321 21,298
------ ------
Total non-current assets 27,274 27,052
------ ------
Total assets $111,995 $111,977
======== ========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable 9,348 8,406
Accrued expenses 8,331 9,836
Total current liabilities 17,679 18,242
------ ------
NON CURRENT LIABILITIES:
Other long-term liabilities 146 151
Liability in respect of employee
rights upon retirement 3,235 2,994
Deferred income taxes 2,361 1,938
-----
Total non-current liabilities 5,742 5,083
----- -----
Total liabilities 23,421 23,325
------ ------
EQUITY:
Share capital 2,802 2,797
Additional paid-in capital 65,073 64,760
Treasury stock at cost (2,088) (2,088)
Accumulated other comprehensive loss 135 (73)
Retained earnings 22,652 23,256
------ ------
Total shareholders' equity 88,574 88,652
Total liabilities and shareholders'
equity $111,995 $111,977
======== ========
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(In thousands, except share and per share data)
Three months ended Twelve months ended
------------------ -------------------
December 31,
------------
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Audited)
Revenues:
Products $8,149 $7,481 $36,053 $30,431
Services 18,148 17,504 70,474 65,363
------ ------ ------ ------
26,297 24,985 106,527 95,794
------ ------ ------- ------
Cost of goods:
Products 6,096 5,609 28,096 23,788
Services 15,451 13,562 57,987 52,969
------ ------ ------ ------
21,547 19,171 86,083 76,757
------ ------ ------ ------
Gross Profit 4,750 5,814 20,444 19,037
----- ----- ------ ------
Operating expenses:
Research and
development, net 111 189 731 1,140
Selling and marketing 1,331 1,008 4,974 3,876
General and
administrative 2,721 2,631 9,409 10,023
Other loss (income) 26 (117) 53 (138)
4,189 3,711 15,167 14,901
----- ----- ------ ------
Operating income 561 2,103 5,277 4,136
Financial expenses,
net (87) (62) (338) (154)
--- --- ---- ----
Income before taxes
on income 474 2,041 4,939 3,982
Taxes on income 677 420 2,333 3,865
--- --- ----- -----
Income (loss) before
equity investment (203) 1,621 2,606 117
Share in results of
affiliated companies (54) (4) (210) (55)
Net income (loss) $(257) $1,617 $2,396 $62
Basic and diluted income (loss) per
share
Net income (loss) per
share (basic and $(0.03) $0.18 $0.27 $0.01
diluted)
Weighted average number of shares
outstanding
Basic 8,848,028 8,828,444 8,848,028 8,828,444
Diluted 8,926,023 8,833,226 8,919,912 8,830,764
========= ========= ========= =========
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
-----------------------------------------------
(In thousands)
Three months ended Twelve months ended
------------------ -------------------
December 31,
------------
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Audited)
Net income (loss) $(257) $1,617 $2,396 $62
Other comprehensive income
Net unrealized gains (losses)
from derivatives (141) (199) (686) 174
Reclassification adjustments for
gains 134 (29) 894 (243)
included in net income and inventory
Total other comprehensive income
(loss) $(264) $1,389 $2,604 $(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 Twelve months ended
------------------ -------------------
December 31,
------------
2017 2016 2017 2016
---- ---- ---- ----
Reported net income (loss) on
GAAP basis $(257) $1,617 $2,396 $62
Adjustments:
Tax adjustments re non-GAAP - 198 - 2,685
adjustments (1)
Other expenses (Acquisition
related - (105) - (105)
expenses)
Share in results of equity
investment of 54 4 210 55
affiliated company
Share based compensation 23 41 174 105
--- --- --- ---
Non-GAAP net income (loss) $(180) $1,755 $2,780 $2,802
===== ====== ====== ======
Non-GAAP net income (loss) per
share $(0.02) $0.20 $0.31 $0.32
(basic and diluted)
Weighted average number of shares
outstanding
Basic 8,848,028 8,828,444 8,848,028 8,828,444
Diluted 8,926,023 8,833,226 8,919,912 8,830,764
========= ========= ========= =========
(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 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 YEAR ENDED
DECEMBER 31, 2017 (unaudited):
Comprehensive income - - - 208 - 2,396 2,604
Share based compensation expenses - - 174 - - - 174
Exercise of options 19,584 5 139 - - - 144
Dividend distributed - - - - - (3,000) (3,000)
--- --- --- --- --- ------ ------
BALANCE AT DECEMBER 31, 2017
(unaudited): 9,122,501 $2,802 $65,073 $135 $(2,088) $22,652 $88,574
--------- ------ ------- ---- ------- ------- -------
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(In thousands)
Three months ended Twelve months ended
------------------ -------------------
December 31,
------------
2017 2016 2017 2016
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Audited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) attributable to
TAT $(257) $1,617 $2,396 $62
Technologies Ltd. shareholders
Adjustments to reconcile net
income to net cash
provided by operating activities:
Depreciation and amortization 1,005 976 3,941 3,636
Loss on sale of property, plant
and equipment 26 30 54 12
Interest from short-term bank
deposits and (6) (13) (6) (24)
restricted deposits
Loss (gain) from change in fair
value of (387) 18 (490) (152)
derivatives
Provision for doubtful accounts 283 (82) 321 (29)
Share in results of equity
investment of affiliated 54 4 210 55
Company
Share based compensation 23 41 174 105
Liability in respect of employee
rights upon (119) 63 241 123
retirement
Deferred income taxes, net 325 (143) 382 1,670
Changes in operating assets and
liabilities:
Decrease (increase) in trade
accounts receivable (23) 1,149 (4,493) (2,392)
Decrease in other current assets
and prepaid 1,626 1,456 488 1,487
expenses
Decrease (increase) in inventory (1,109) (1,340) 210 (2,707)
Increase (decrease) in trade
accounts payable (857) (187) 578 1,192
Increase (decrease) in accrued
expenses (421) 1,163 (1,505) 2,521
Increase (decrease) in other
long-term liabilities (17) 85 (5) (38)
--- --- --- ---
Net cash provided by operating
activities $146 $4,837 $2,496 $5,521
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment in affiliated company - (516) (383) (905)
Funds in respect of employee
rights upon (59) (73) (156) 2
retirement
Proceeds from sale of property
and equipment - (1) - 17
Purchase of property and
equipment (888) (1,041) (3,520) (5,702)
Maturities of short-term deposits - - 500 7,182
--- --- --- -----
Cash flows provided by (used in)
investing $(947) $(1,631) $(3,559) $594
activities
CASH FLOWS FROM FINANCING
ACTIVITIES:
Realization of contingency - - - (500)
Payment of cash dividend - - (3,000) (3,000)
Exercise of options - - 144 130
--- --- --- ---
Cash flows used in financing
activities $ - $ - $(2,856) $(3,370)
--------------- --------------- ------- -------
Net increase (decrease) in cash
and cash (801) 3,206 (3,919) 2,745
equivalents
Cash and cash equivalents at
beginning of 18,315 18,227 21,433 18,688
period
Cash and cash equivalents at end
of period $17,514 $21,433 $17,514 $21,433
------- ------- ------- -------
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP)
---------------------------------------------------------
(UNAUDITED)
----------
(In thousands)
Three months ended Twelve months ended
------------------ -------------------
December 31,
------------
2017 2016 2017 2016
---- ---- ---- ----
Net income (loss) $(257) $1,617 $2,396 $62
Adjustments:
Share in results of equity investment 54 4 210 55
of affiliated companies
Taxes on income 677 420 2,333 3,865
Financial expenses, net 87 62 338 154
Depreciation and amortization 1,005 976 3,941 3,636
Share based compensation 23 41 174 105
--- --- --- ---
Adjusted EBITDA $1,589 $3,120 $9,392 $7,877
====== ====== ====== ======
For more information of TAT Technologies Ltd., please visit our web-site:
Guy Nathanzon, CFO
TAT Technologies Ltd.
Tel: 972-8-862-8500
guyn@tat-technologies.com
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SOURCE TAT Technologies Ltd
