TAT Technologies Reports Second Quarter 2018 Results
GEDERA, Israel, Aug. 30, 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 three month and six month periods ended June 30, 2018.
Key Financial Highlights:
-- Revenues for Q2 2018 were $24.8 million compared with $26.6 million in
Q2 2017. Revenues for the six-month period that ended on June 30, 2018
were $49.2 million compared with $53.6 million in the six-month period
that ended on June 30, 2017.
-- Adjusted EBITDA for Q2 2018 was $(0.3) million compared with $2.4
million in Q2 2017. Adjusted EBITDA for the six-month period that ended
on June 30, 2018 was $0.05 million compared with $5.3 million in the
six-month period that ended on June 30, 2017.
-- GAAP net loss was $1.4 million, or $0.16 per diluted share in Q2 2018
compared with a net income of $0.6 million, or $0.07 per diluted share
in Q2 2017.
-- Non-GAAP net loss of $1.2 million, or $0.14 per diluted share in Q2
2018, compared with non-GAAP net income of $0.8 million, or $0.09 per
diluted share in Q2 2017.
Mr. Igal Zamir, CEO and President of TAT Technologies stated, "The first six months of 2018 were challenging. We suffered from delay in order intake. Also, as a preparation for 2018 we invested in employees and machinery which caused an increased level of expenses. Starting Q2 we initiated a plan to increase sales and streamline operations which I expect will improve the results in the second half of 2018. Our increased back-log keeps me optimistic about the future of the company. During the first six months of 2018 we won several long-term strategic contracts with expected revenue over the next few years of approximately USD60M. These contracts position us in the front line of MRO companies both to aircraft manufactures and leading airlines around the world. "
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 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 website:
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,
2018 2017
---- ----
(unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $15,186 $17,514
Short-term bank deposits 470 470
Accounts receivable, net 22,596 25,744
Other current assets and prepaid
expenses 2,797 2,363
Inventory, net 38,560 38,630
------ ------
Total current assets 79,609 84,721
------ ------
NON-CURRENT ASSETS:
Investment in affiliates 1,132 1,192
Funds in respect of employee rights
upon retirement 2,499 2,779
Deferred income taxes 623 937
Intangible assets, net 978 1,045
Property, plant and equipment, net 21,636 21,321
------ ------
Total non-current assets 26,868 27,274
------ ------
Total assets $106,477 $111,995
======== ========
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable 8,423 9,348
Accrued expenses 6,439 8,331
----- -----
Total current liabilities 14,862 17,679
------ ------
NON CURRENT LIABILITIES:
Other long-term liabilities 225 146
Liability in respect of employee
rights upon retirement 2,932 3,235
Deferred income taxes 1,992 2,361
-----
Total non-current liabilities 5,149 5,742
----- -----
Total liabilities 20,011 23,421
------ ------
EQUITY:
Share capital 2,809 2,802
Additional paid-in capital 65,382 65,073
Treasury stock at cost (2,088) (2,088)
Accumulated other comprehensive income
(loss) (171) 135
Retained earnings 20,534 22,652
------ ------
Total shareholders' equity 86,466 88,574
Total liabilities and shareholders'
equity $106,477 $111,995
======== ========
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,
-------- ------------
2018 2017 2018 2017 2017
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Revenues:
Products $6,160 $9,369 $12,996 $18,919 $36,053
Services 18,672 17,199 36,193 34,730 70,474
------ ------ ------ ------ ------
24,832 26,568 49,189 53,649 106,527
------ ------ ------ ------ -------
Cost of goods:
Products 6,451 7,532 12,981 14,443 28,096
Services 15,784 13,993 30,439 28,606 57,987
------ ------ ------ ------ ------
22,235 21,525 43,420 43,049 86,083
------ ------ ------ ------ ------
Gross Profit 2,597 5,043 5,769 10,600 20,444
----- ----- ----- ------ ------
Operating expenses:
Research and
development, net 176 176 495 405 731
Selling and
marketing 1,265 1,296 2,635 2,438 4,974
General and
administrative 2,576 2,239 4,746 4,506 9,409
Other loss - - - 28 53
4,017 3,711 7,876 7,377 15,167
----- ----- ----- ----- ------
Operating income
(loss) (1,420) 1,332 (2,107) 3,223 5,277
------ ----- ------ ----- -----
Financial income
(expenses), net 21 (100) 19 (272) (338)
--- ---- --- ---- ----
Income (loss) before
taxes on income (1,399) 1,232 (2,088) 2,951 4,939
Taxes on income (95) 535 (30) 1,033 2,333
--- --- --- ----- -----
Income (loss) before
equity investment (1,304) 697 (2,058) 1,918 2,606
Share in results of
affiliated company (70) (86) (60) (106) (210)
Net income (loss) $(1,374) $611 $(2,118) $1,812 $2,396
Basic and diluted income (loss) per share
Net income (loss)
per share $(0.16) $0.07 $(0.24) $0.21 $0.27
====== ===== ====== ===== =====
Weighted average number of shares
outstanding
Basic 8,862,473 8,828,444 8,855,251 8,828,444 8,848,028
Diluted 8,876,232 8,832,080 8,887,641 8,892,756 8,909,072
========= ========= ========= ========= =========
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
-------------
Three months ended Six months ended Year ended
------------------ ---------------- ----------
June 30, December 31,
-------- ------------
2018 2017 2018 2017 2017
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Net income (loss) $(1,374) $611 $(2,118) $1,812 $2,396
Other comprehensive income
Net unrealized losses from
derivatives (288) (227) (348) (324) (686)
Reclassification adjustments for
gains 128 336 42 873 894
included in net income and inventory
---
Total other comprehensive income
(loss) $(1,534) $720 $(2,424) $2,361 $2,604
======= ==== ======= ====== ======
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,
--------
2018 2017
---- ----
Reported net income (loss) on GAAP
basis $(1,374) $611
Adjustments:
Share in results of affiliated
company 70 86
Share based compensation 64 58
--- ---
Non-GAAP net income (loss) $(1,240) $755
======= ====
Non-GAAP net income per share
(loss) $(0.14) $0.09
====== =====
Weighted average number of shares outstanding
Basic 8,862,473 8,828,444
Diluted 8,876,232 8,832,080
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, 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 (audited):
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
(audited) 9,122,501 $2,802 $65,073 $135 $(2,088) $22,652 $88,574
CHANGES DURING THE SIX MONTHS ENDED
JUNE 30, 2018 (unaudited):
Comprehensive loss - - - (306) - (2,118) (2,424)
Share based compensation expenses - - 119 - - - 119
Exercise of options 26,668 7 190 - - - 197
------ --- --- --- --- --- ---
BALANCE AT JUNE 30, 2018 (unaudited) 9,149,169 $2,809 $65,382 $(171) $(2,088) $20,534 $86,466
========= ====== ======= ===== ======= ======= =======
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,
-------- ------------
2018 2017 2018 2017 2017
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) attributable
to TAT Technologies Ltd.
shareholders $(1,374) $611 $(2,118) $1,812 $2,396
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 1,029 980 2,037 1,949 3,941
Loss on sale of property,
plant and equipment - - - 28 54
Interest from short-term bank
deposits and restricted
deposits - - - - (6)
Loss (gain) from change in
fair value of derivatives 174 (43) 386 (60) (490)
Provision for doubtful
accounts 127 19 127 38 321
Share in results of affiliated
company 70 86 60 106 210
Share based compensation 64 58 119 115 174
Liability in respect of
employee rights upon
retirement (120) 68 (303) 170 241
Deferred income taxes, net (231) (342) (55) (284) 382
Changes in operating assets
and liabilities:
Decrease (increase) in trade
accounts receivable 3,334 (1,820) 3,022 (1,285) (4,493)
Decrease (increase) in other
current assets and prepaid
expenses (848) 324 (748) (618) 488
Decrease in inventory 2,352 1,407 88 2,672 210
Increase (decrease) in trade
accounts payable (3,117) 67 (1,032) (1,371) 578
Decrease in accrued expenses (2,058) (1,613) (1,892) (383) (1,505)
Increase (decrease) in other
long-term liabilities 101 (11) 79 25 (5)
--- --- --- --- ---
Net cash provided by (used in)
operating activities $(497) $(209) $(230) $2,914 $2,496
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment in affiliated
company - (164) - (251) (383)
Funds in respect of employee
rights upon retirement (65) (35) (22) (71) (156)
Proceeds from sale of property
and equipment - - 7 - -
Purchase of property and
equipment (735) (809) (2,185) (1,429) (3,520)
Maturities of short-term
deposits - 500 - 500 500
--- --- --- --- ---
Cash flows used in investing
activities $(800) $(508) $(2,200) $(1,251) $(3,559)
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(In thousands)
-------------
Three months ended Six months ended Year ended
------------------ ---------------- ----------
June 30, December 31,
-------- ------------
2018 2017 2018 2017 2017
---- ---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payment of cash dividend - (3,000) - (3,000) (3,000)
Exercise of options 102 - 102 - 144
--- --- --- --- ---
Cash flows provided by (used
in) financing activities $102 $(3,000) $102 $(3,000) $(2,856)
---- ------- ---- ------- -------
Net decrease in cash and cash
equivalents (1,195) (3,717) (2,328) (1,337) (3,919)
Cash and cash equivalents at
beginning of period 16,381 23,813 17,514 21,433 21,433
------ ------ ------ ------ ------
Cash and cash equivalents at
end of period $15,186 $20,096 $15,186 $20,096 $17,514
------- ------- ------- ------- -------
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(NON-GAAP) (UNAUDITED)
(In thousands)
-------------
Three months ended Year ended
Six months ended
----------------
June 30, June 30, December 31,
-------- -------- ------------
2018 2017 2018 2017 2017
---- ---- ---- ---- ----
Net income (loss) $(1,374) $611 $(2,118) $1,812 $2,396
Adjustments:
Share in results of affiliated
company 70 86
60 106 210
Taxes on income (95) 535 (30) 1,033 2,333
Financial expenses (income),
net (21) 100 (19) 272 338
Depreciation and amortization 1,029 980 2,037 1,949 3,941
Share based compensation 64 58 119 115 174
--- --- --- --- ---
Adjusted EBITDA $(327) $2,370 $49 $5,287 $9,392
===== ====== === ====== ======
Contact:
Ms. Inna Shpringer
MARCOM Manager
Tel: 972-8-862-8594
innas@tat-technologies.com
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SOURCE TAT Technologies Ltd
