TAT Technologies Reports Third Quarter 2018 Results
GEDERA, Israel, Nov. 28, 2018 /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 nine month periods ended September 30, 2018.
Key Financial Highlights:
-- Revenues for Q3 2018 were $23.2 million compared with $26.6 million in
Q3 2017. Revenues for the nine-month period that ended on September 30,
2018 were $72.4 million compared with $80.2 million in the nine-month
period that ended on September 30, 2017.
-- Adjusted EBITDA for Q3 2018 was $1 million, compared with $2.5 million
in Q3 2017. Adjusted EBITDA for Q3 2018 improved by $1.3 million
compared to Q2 2018. Adjusted EBITDA for the nine-month period that
ended on September 30, 2018 was $1 million compared with $7.8 million in
the nine-month period that ended on September 30, 2017.
-- GAAP net loss was $0.5 million, or $0.06 per diluted share in Q3 2018
compared with a net income of $0.8 million, or $0.10 per diluted share
in Q3 2017. The net loss per share in Q3 2018 was lower by $0.1 per
share compared with Q2 2018.
-- Non-GAAP net loss of $0.5 million, or $0.05 per diluted share in Q3
2018, compared with non-GAAP net income of $0.9 million, or $0.10 per
diluted share in Q3 2017. The net loss per share in Q3 2018 was lower by
$0.09 per share compared with Q2 2018.
-- Positive Operational cash flow of $3.1 million in Q3 2018 compared with
negative operational cash flow of $0.6 million in Q3 2017. Positive
operational cash flow of $2.9 million in the nine months of 2018
compared with positive operational cash flow of $ 2.4 million in the
nine months of 2017.
Mr. Igal Zamir, CEO and President of TAT Technologies stated, "We continue our efforts to improve our results. We are in the midst of implementing several profitability improvements measures in the Company and its subsidiaries which resulted in improved cash flow in Q3 2018 compared to the previous quarter. We now believe that total revenues for 2018 will be about 10% lower compared to 2017. However, we see several meaningful opportunities in the market. We look forward to see the future results of all the measures that were taken in order to increase our 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 (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 web-site: www.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)
September 30, December 31,
2018 2017
---
(unaudited)
(audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $17,240 $17,514
Short-term bank deposits 470 470
Accounts receivable, net 21,055 25,744
Other current assets and prepaid
expenses 2,690 2,363
Inventory, net 39,040 38,630
Total current assets 80,495 84,721
NON-CURRENT ASSETS:
Investment in affiliates 1,090 1,192
Funds in respect of employee rights
upon retirement 2,532 2,779
Deferred income taxes 520 937
Intangible assets, net 945 1,045
Property, plant and equipment, net 21,596 21,321
Total non-current assets 26,683 27,274
Total assets $107,178 $111,995
===
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable 9,263 9,348
Accrued expenses 6,590 8,331
Total current liabilities 15,853 17,679
NON CURRENT LIABILITIES:
Other long-term liabilities 200 146
Liability in respect of employee
rights upon retirement 2,948 3,235
Deferred income taxes 2,070 2,361
Total non-current liabilities 5,218 5,742
Total liabilities 21,071 23,421
EQUITY:
Share capital 2,809 2,802
Additional paid-in capital 65,428 65,073
Treasury stock at cost (2,088) (2,088)
Accumulated other comprehensive gain
(loss) (32) 135
Retained earnings 19,990 22,652
Total shareholders' equity 86,107 88,574
Total liabilities and shareholders'
equity $107,178 $111,995
===
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,
---
2018 2017 2018 2017 2017
---
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
Revenues:
Products $5,543 $8,985 $18,539 $27,904 $36,053
Services 17,642 17,596 53,835 52,326 70,474
---
23,185 26,581 72,374 80,230 106,527
---
Cost of goods:
Products 5,752 7,557 18,733 22,000 28,096
Services 14,399 13,930 44,838 42,536 57,987
---
20,151 21,487 63,571 64,536 86,083
---
Gross Profit 3,034 5,094 8,803 15,694 20,444
---
Operating expenses:
Research and
development, net (35) 215 460 620 731
Selling and
marketing 1,171 1,205 3,806 3,643 4,974
General and
administrative 1,987 2,182 6,733 6,688 9,409
Other loss (income) (1) (1) (1) 27 53
3,122 3,601 10,998 10,978 15,167
---
Operating income
(loss) (88) 1,493 (2,195) 4,716 5,277
---
Financial income
(expenses), net (58) 21 (39) (251) (338)
---
Income (loss) before
taxes on income (146) 1,514 (2,234) 4,465 4,939
Taxes on income 356 623 326 1,656 2,333
---
Income (loss) before
equity investment (502) 891 (2,560) 2,809 2,606
Share in results of
affiliated
companies (42) (50) (102) (156) (210)
Net income (loss) $(544) $841 $(2,662) $2,653 $2,396
Basic and diluted income (loss) per share
Net income (loss)
per share $(0.06) $0.10 $(0.30) $0.30 $0.27
Weighted average number of shares outstanding
Basic 8,874,696 8,848,028 8,861,567 8,848,028 8,848,028
Diluted 8,874,696 8,924,358 8,861,567 8,920,054 8,909,072
===
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
---
(In thousands)
Three months ended Nine months ended Year ended
---
September 30, December 31,
---
2018 2017 2018 2017 2017
---
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
Net income (loss) $(544) $841 $(2,662) $2,653 $2,396
Other comprehensive income
Net unrealized gains
(losses) from
derivatives 16 (221) (332) (545) (686)
Reclassification
adjustments for gains
(losses) included in
net income and
inventory 123 (113) 165 760 894
---
Total other
comprehensive income
(loss) $(405) $507 $(2,829) $2,868 $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
September 30,
2018 2017
---
Reported net income
(loss) on GAAP
basis $(544) $841
Adjustments:
Share in results of
equity investment
of affiliated
company 42 50
Share based
compensation 46 36
---
Non-GAAP net income
(loss) $(456) $927
Non-GAAP net income
per share (loss) $(0.05) $0.10
Weighted average number of shares outstanding
Basic 8,874,696 8,848,028
Diluted 8,874,696 8,924,358
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 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 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 NINE MONTHS ENDED SEPTEMBER 30, 2018 (unaudited):
Comprehensive loss (167) (2,662) (2,829)
Share based compensation expenses 165 165
Exercise of options 26,668 7 190 197
BALANCE AT SEPTEMBER 30, 2018 (unaudited) 9,149,169 $2,809 $65,428 $(32) $(2,088) $19,990 $86,107
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
2018 2017 2018 2017 2017
(Unaudited)
(Unaudited)
(Unaudited) (Unaudited) (Audited)
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) attributable
to TAT Technologies Ltd.
shareholders $(544) $841 $(2,662) $2,653 $2,396
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 1,048 987 3,085 2,936 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 35 (40) 422 (100) (490)
Provision for doubtful
accounts (474) (347) 38 321
Share in results and sale of
equity investment of
affiliated Company 42 50 102 156 210
Share based compensation 46 36 165 151 174
Liability in respect of
employee rights upon
retirement 16 190 (287) 360 241
Deferred income taxes, net 181 341 126 57 382
Changes in operating assets
and liabilities:
Decrease (increase) in trade
accounts receivable 2,015 (3,185) 5,036 (4,470) (4,493)
Decrease (increase) in other
current assets and prepaid
expenses 172 (521) (576) (1,138) 488
Decrease (increase) in
inventory (569) (1,353) (481) 1,319 210
Increase in trade accounts
payable 1,042 2,805 10 1,433 578
Increase (decrease) in
accrued expenses 151 (701) (1,741) (1,084) (1,505)
Increase (decrease) in other
long-term liabilities (25) (13) 54 12 (5)
Net cash provided by (used in)
operating activities $3,136 $(563) $2,906 $2,351 $2,496
CASH FLOWS FROM INVESTING
ACTIVITIES:
Investment in affiliated
company (133) (384) (383)
Funds in respect of employee
rights upon retirement (26) (22) (97) (156)
Proceeds from sale of property
and equipment 7
Purchase of property and
equipment (1,177) (1,203) (3,362) (2,632) (3,520)
Maturities of short-term
deposits 500 500
Cash flows used in investing
activities $(1,177) $(1,362) $(3,377) $(2,613) $(3,559)
Three months ended Nine months ended
Year ended
September 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)
Exercise of options 95 144 197 144 144
Cash flows provided by (used
in) financing activities $95 $144 $197 $(2,856) $(2,856)
Net increase (decrease) in
cash and cash equivalents 2,054 (1,781) (274) (3,118) (3,919)
Cash and cash equivalents at
beginning of period 15,186 20,096 17,514 21,433 21,433
Cash and cash equivalents at
end of period $17,240 $18,315 $17,240 $18,315 $17,514
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA (NON-GAAP) (UNAUDITED)
---
(In thousands)
Three months ended Nine months ended Year ended
---
September 30, September 30, December 31,
---
2018 2017 2018 2017 2017
---
Net income (loss) $(544) $841 $(2,662) $2,653 $2,396
Adjustments:
Share in results and sale of
equity 42 50 102 156
investment of affiliated
companies
210
Taxes on income 356 623 326 1,656 2,333
Financial expenses (income),
net 58 (21) 39 251 338
Depreciation and amortization 1,048 987 3,085 2,936 3,941
Share based compensation 46 36 165 151 174
---
Adjusted EBITDA $1,006 $2,516 $1,055 $7,803 $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
