TAT Technologies Reports Third Quarter 2019 Results
GEDERA, Israel, Nov. 29, 2019 /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 months periods ended September 30, 2019.
Key Financial Highlights:
-- Revenues for Q3 2019 increased by 13% to $26.1 million compared with
$23.2 million in Q3 2018. Revenues for the nine-months period that
ended on September 30, 2019 increased by 4% to $75.4 million compared
with $72.4 million in the nine-months period that ended on September 30,
2018.
-- Gross profit for Q3 2019 increased by 40% to $4.2 million (16.3% of
revenues) compared with $3.0 million (13.1% of revenues) in Q3 2018.
Gross profit for the nine-months period that ended on September 30, 2019
increased by 27% to $11.2 million (14.8% of revenues) compared with $8.8
million (12.2% of revenues) in the nine-months period that ended on
September 30, 2018.
-- EBITDA for Q3 2019 increased by 100% to $2.0 million compared with $1.0
million in Q3 2018. EBITDA for the nine-months period that ended on
September 30, 2019 increased by 380% to $4.8 million compared with $1.0
million in the nine-months period that ended on September 30, 2018.
-- GAAP net income was $0.16 million, or $0.02 per diluted share in Q3 2019
compared with a net loss of $0.5 million, or ($0.06) per diluted share
in Q3 2018. GAAP net income was $0.34 million, or $0.04 per diluted
share in the nine-months period that ended on September 30, 2019
compared with a net loss of $2.7 million, or ($0.30) per diluted share
in the nine-months period that ended on September 30, 2018.
Mr. Igal Zamir, CEO and President of TAT Technologies stated, "We are pleased with the results of the recent nine months. Revenues continue to grow both on the MRO and OEM segments. TAT continues its improvements in all operational aspects and 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 12 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
Contact:
Mr. Ehud Ben-Yair
Chief Financial Officer
Tel: 972-8-862-8503
ehudb@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,
2019 2018
---
(unaudited)
(audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $16,815 $15,950
Accounts receivable, net 20,515 19,277
Other current assets and prepaid expenses 3,404 3,627
Inventory, net 41,686 38,605
Total current assets 82,420 77,459
NON-CURRENT ASSETS:
Investment in affiliates 949 1,078
Funds in respect of employee rights upon retirement 1,372 2,253
Deferred income taxes 230 162
Intangible assets, net 810 911
Property, plant and equipment, net 21,213 21,424
Operating lease right of use assets 6,779 -
Total non-current assets 31,353 25,828
Total assets $113,773 $103,287
===
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable $10,779 $8,270
Accrued expenses 7,946 6,411
Operating lease liabilities 1,331 -
Total current liabilities 20,056 14,681
NON CURRENT LIABILITIES:
Other long-term liabilities 82 180
Liability in respect of employee rights upon retirement 1,736 2,648
Deferred income taxes 1,259 1,484
Operating lease liabilities 5,772 -
Total non-current liabilities 8,849 4,312
Total liabilities 28,905 18,993
EQUITY:
Share capital 2,809 2,809
Additional paid-in capital 65,526 65,535
Treasury stock at cost (2,088) (2,088)
Accumulated other comprehensive income (loss) 34 (206)
Retained earnings 18,587 18,244
Total shareholders' equity 84,868 84,294
Total liabilities and shareholders' equity $113,773 $103,287
===
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,
---
2019 2018 2019 2018 2018
---
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
Revenues:
Products $5,725 $5,543 $17,924 $18,539 $23,151
Services 20,351 17,642 57,454 53,835 70,027
---
26,076 23,185 75,378 72,374 93,178
---
Cost of goods:
Products 4,853 5,752 15,037 18,733 23,807
Services 16,983 14,399 49,166 44,838 60,980
---
21,836 20,151 64,203 63,571 84,787
---
Gross Profit 4,240 3,034 11,175 8,803 8,391
---
Operating expenses:
Research and development, net 46 (35) 95 460 553
Selling and marketing 1,329 1,171 3,803 3,806 4,913
General and administrative 2,031 1,987 5,833 6,733 8,559
Other loss (1) (1) (4)
3,406 3,122 9,731 10,998 14,021
---
Operating income (loss) 834 (88) 1,444 (2,195) (5,630)
---
Financial expenses, net (159) (58) (543) (39) (102)
---
Income (loss) before taxes on income (tax 675 (146) 901 (2,234) (5,732)
benefit)
Taxes on income (tax benefit) 453 356 419 326 (1,464)
---
Income (loss) before equity investment 222 (502) 482 (2,560) (4,268)
Share in results of affiliated companies (65) (42) (139) (102) (140)
Net income (loss) $157 $(544) $343 $(2,662) $(4,408)
Basic and diluted income (loss) per share
Net income (loss) per share $0.02 $(0.06) $0.04 $(0.30) $(0.5)
Weighted average number of shares
outstanding
Basic 8,874,696 8,874,696 8,874,696 8,861,567 8,864,885
Diluted 8,874,696 8,874,696 8,874,696 8,861,567 8,864,885
===
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
---
(In thousands)
Three months ended Nine months ended Year ended
September 30, December 31,
2019 2018 2019 2018 2018
(Unaudited)
(Unaudited) (Unaudited) (Unaudited) (Audited)
Net income (loss) $157 $(544) $343 $(2,662) $(4,408)
Other comprehensive income
Net unrealized income (losses) from 72 16 358 (332) (672)
derivatives
Reclassification adjustments for gains (losses) (104) 123 (118) 165 331
included in net income and inventory
Total other comprehensive income (loss) $125 $(405) $583 $(2,829) $(4,749)
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
---
(In thousands, except share data)
TAT Technologies Ltd. Shareholders
Share capital
Accumulated
other
Number of
Additional paid-
comprehensive
Treasury
Retained
shares issued Amount
in capital
income (loss)
shares
earnings
Total equity
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 option 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 YEAR ENDED
DECEMBER 31, 2018 (audited):
Comprehensive loss (341) (4,408) (4,749)
Share based compensation expenses 272 272
Exercise of options 26,668 7 190 197
BALANCE AT DECEMBER 31, 2018 (audited) 9,149,169 $2,809 $65,535 $(206) $(2,088) $8,244 $84,294
TAT TECHNOLOGIES AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
---
(In thousands, except share data)
TAT Technologies Ltd. Shareholders
Share capital
Number of shares issued Amount Additional paid-in capital Accumulated other comprehensive income
(loss) Treasury shares Retained earnings
Total equity
BALANCE AT DECEMBER 31, 2018 (audited) 9,149,169 $2,809 $65,535 $(206) $(2,088) $8,244 $84,294
CHANGES DURING THE NINE MONTHS ENDED
SEPTEMBER 30, 2019 (unaudited):
Comprehensive income 240 343 583
Share based compensation income (9) (9)
BALANCE AT SEPTEMBER 30, 2019 (unaudited) 9,149,169 $2,809 $65,526 $34 $(2,088) $18,587 $84,868
Share capital
Number of shares issued Amount Additional paid-in capital Accumulated other comprehensive income
(loss) Treasury shares Retained earnings
Total equity
BALANCE AT JULY 1, 2019 (unaudited) 9,149,169 $2,809 $65,490 $66 $(2,088) $18,430 $84,707
CHANGES DURING THE THREE MONTHS
ENDED SEPTEMBER 30, 2019 (unaudited):
Comprehensive income (32) 157 125
Share based compensation income 36 36
BALANCE AT SEPTEMBER 30, 2019 (unaudited) 9,149,169 $2,809 $65,526 $34 $(2,088) $18,587 $84,868
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,
2019 2018 2019 2018 2018
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
(Audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $157 $(544) $343 $(2,662) $(4,408)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 1,097 1,048 3,245 422 4,185
Loss (gain) from change in fair value of derivatives (38) 35 (293) (347) 382
Provision for doubtful accounts (474) 102 (347)
Share in results of equity investment of affiliated Company 65 42 139 165 140
Share based compensation 36 46 (9) 422 272
Non cash finance expense 107 324
Liability in respect of employee rights upon retirement (134) 16 (912) (287) (587)
Deferred income taxes, net (115) 181 (293) 126 (102)
Changes in operating assets and liabilities:
Decrease (increase) in trade accounts receivable 1,965 2,015 (1,238) 5,036 6,814
Decrease (increase) in other current assets and prepaid 487 172 1,743 (576) (1,575)
expenses
Decrease(increase) in inventory (1,043) (569) (3,165) (481) 161
Increase (decrease) in trade accounts payable 56 1,042 2,590 10 (969)
Increase (decrease) in accrued expenses 1,193 151 1,535 (1,741) (1,920)
Increase (decrease) in other long-term liabilities (20) (25) (98) 54 34
Net cash provided by operating activities $3,813 $3,136 $3,911 $2,906 $2,080
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in affiliated company (10) (26)
Funds in respect of employee rights upon retirement (22) (22) (22)
Proceeds from sale of property and equipment 7 7
Purchase of property and equipment (1,287) (1,177) (3,014) (3,362) (4,270)
Maturities of short-term deposits 470
Cash flows used in investing activities $(1,287) $(1,177) $(3,046) $(3,377) $(3,841)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of options 95 197 197
Cash flows provided by financing activities
$ - $95
$ - $197 $197
Net increase (decrease) in cash and cash equivalents 2,525 2,054 865 (274) (1,564)
Cash and cash equivalents at beginning of period 14,290 15,186 15,950 17,514 17,514
Cash and cash equivalents at end of period $16,815 $17,240 $16,815 $17,240 $15,950
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,
---
2019 2018 2019 2018 2018
---
Net income (loss) $157 $(544) $343 $(2,662) $(4,408)
Adjustments:
Share in results of equity investment 65 42
of affiliated companies
139 102 140
Taxes on income (tax benefit) 453 356 419 326 (1,464)
Financial expenses, net 159 58 543 39 102
Depreciation and amortization 1,145 1,048 3,341 3,085 4,185
Share based compensation 36 46 (9) 165 272
---
Adjusted EBITDA $2,015 $1,006 $4,776 $1,055 $(1,173)
Note to the financial statements
In February 2016, the FASB issued
ASU No. 2016-02, Leases (Topic
842), which requires lessees to
recognize leases on-balance sheet
and disclose key information about
leasing arrangements. The new
standard establishes a right-of-
use (ROU) model that requires a
lessee to recognize a ROU assets
and lease liabilities on the
balance sheet. Leases will be
classified as finance or
operating, with classification
affecting the pattern and
classification of expense
recognition in the statement of
operations. The Company adopted
the new standard on January 1,
2019 using the modified
retrospective transition method
and did not restate comparative
periods. The new standard provides
a number of optional practical
expedients in transition. The
Company recognizes the lease
expenses in the consolidated
statements of Operations on a
straight-line basis over the
lease period.
Additionally, the Company did not separate lease and non-lease components for all of its leases. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, the Company will not recognize ROU assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases of those assets in transition. Instead, the Company will continue to recognize the lease payments for those leases in profit or loss on a straight-line basis over the lease term.
The most significant effects of adoption relate to (1) the recognition of new ROU assets and lease liabilities on its balance sheet for real estate operating leases; and (2) recording of Non-cash finance expenses on its statement of income.
The adoption of the standard resulted in recognition of $7.3 million of lease assets and lease liabilities as of January 1, 2019 on the Company's consolidated balance sheets. During the three months period ended September 30, 2019 and during the nine months period ended September 30, 2019 the Company recorded non-cash finance expenses in the amount of $0.11 million and $0.32 million, respectively.
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SOURCE TAT Technologies Ltd
